Dj Zebra Technologies Corp. Cl A Stock Underperforms Friday When Compared To Competitors Despite Daily Gains

Zebra Technologies Corporation ZBRA benefits from strength across its businesses, strategic acquisitions, cost management actions and focus on operational excellence. The company remains focused on investing in growth opportunities and solidifying its long-term market position.

ZBRA, which has a market capitalization of $20.2 billion, currently flaunts a Zacks Rank #1 (Strong Buy). Let us delve into the factors that have been aiding the firm for a while now.

Business Strength: Zebra Technologies has been witnessing growth across the Enterprise Visibility & Mobility segment. Higher sales of mobile computing and data capture solutions have been driving the segment’s revenues, which increased 33.7% year over year in the third quarter of 2024. An increase in sales of services and software driven by retail software wins has been also aiding the segment.

Recovery in demand for printing solutions and RFID products has been also boosting the Asset Intelligence & Tracking segment’s performance. In the third quarter, the segment’s sales increased 26.5% on a year-over-year basis. Driven by strength across its business, the company expects fourth-quarter 2024 net sales to increase in the band of 28-31% year over year.

Benefits From Acquisitions: The company has steadily strengthened its business through acquisitions. ZBRA’s acquisition of Matrox Imaging (June 2022) enabled it to combine the company’s fixed industrial scanning and machine vision portfolio with the latter’s expertise in the imaging market. Also, the acquisition of antuit.ai (October 2021) complemented the planning and demand forecasting module for its retail software portfolio.

Cost-Management Actions: It remains focused on cost-management actions. For instance, its gross margin increased 410 basis points to 48.8%, supported by higher volume, leverage and business mix. The company completed its actions under the 2022 productivity plan and employee voluntary retirement plan in the third quarter. Under these plans, it has achieved $110 million in net savings till the third quarter, with $50 million in 2023 and $60 million in the first nine months of 2024.

YTD Price Performance of ZBRA

Year to date, the company’s shares have surged 43.5%, higher than the industry’s 36.9% growth.

Improvement in Cash Flow: Although free cash flow was negative in 2023, the company expects the metric to be $850 million in 2024. It is worth noting that Zebra Technologies’ free cash flow amounted to $665.9 million in the first three quarters of 2024 against the free cash outflow of $193 million in the year-ago period.

This should support the company’s shareholder-friendly policies. For instance, the company repurchased shares worth $16 million in the first nine months of 2024. In May 2022, its board of directors authorized a share repurchase program for up to $1 billion. Exiting the third quarter, the company had $877 million remaining under this program.

Other Stocks to Consider

Some other top-ranked companies from the same space are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s 2024 earnings has increased 8.4%.

RBC Bearings RBC presently has a Zacks Rank of 2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 2.5%.

In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 (ending March 2025) earnings has increased 2.3%.

Kadant Inc. KAI currently carries a Zacks Rank of 2. KAI delivered a trailing four-quarter average earnings surprise of 17.2%.

In the past 60 days, the consensus estimate for Kadant’s 2024 earnings has increased 1.8%.

Zacks Investment Research

Zebra Technologies (ZBRA) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, ZBRA crossed above the 20-day moving average, suggesting a short-term bullish trend.

The 20-day simple moving average is a popular trading tool. It provides a look back at a stock's price over a 20-day period, and is beneficial to short-term traders since it smooths out price fluctuations and provides more trend reversal signals than longer-term moving averages.

Like other SMAs, if a stock's price is moving above the 20-day, the trend is considered positive. When the price falls below the moving average, it can signal a downward trend.

Building a successful investment portfolio takes skill and hard work, no matter if you're a growth, value, income, or momentum-focused investor.

But how do you find the right combination of stocks? Funding your retirement, your kids' college tuition, or your short- and long-term savings goals certainly requires significant returns.

Enter the Zacks Rank.

What is the Zacks Rank?

The Zacks Rank is a unique, proprietary stock-rating model that utilizes earnings estimate revisions to help investors build a winning portfolio.

There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.

Agreement is the extent to which all brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of analysts revising their estimates higher, the better chance the stock will outperform.

Magnitude is the size of the recent change in the consensus estimate for the current and next fiscal years.

Upside is the difference between the most accurate estimate, which is calculated by Zacks, and the consensus estimate.

Surprise is made up of a company's last few quarters' earnings per share surprises; companies with a positive earnings surprise are more likely to beat expectations in the future.

These four factors are assigned a raw score that's recalculated every night, which is then compiled into the ranking system. Stocks are classified into five groups using this data, ranging from "Strong Buy" to "Strong Sell."

The Power of Institutional Investors

The Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.

Institutional investors are responsible for managing the trillions of dollars invested in mutual funds, hedge funds, and investment banks. Research has shown that these investors can and do move the market due to the large amount of money they deal with, and thus, the market tends to move in the same direction as them.

In order to determine the fair value of a company and its shares, institutional investors design valuation models that focus on earnings and earnings estimates. Because if you raise earnings estimates, it then creates a higher fair value for a company and its stock price.

Institutional investors will use these changes to help in their decision-making, typically buying stocks with rising estimates and selling those with falling estimates. Higher earnings expectations can translate into a rise in stock price and bigger gains for the investor.

Retail investors who get in at the first sign of upward revisions have a distinct advantage over larger investors since it can often take weeks, if not months, for an institutional investor to build a position. They'll also benefit from the expected institutional buying that could follow.

Not only can the Zacks Rank help you take advantage of trends in earnings estimate revisions, but it can also provide a way to get into stocks that are highly sought after by professionals.

How to Invest with the Zacks Rank

The Zacks Rank is known for transforming investment portfolios. In fact, a portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 32 years, with an average annual return of +25.41%.

Moreover, stocks with a new #1 (Strong Buy) ranking have some of the biggest profit potential, while those that fell to a #4 (Sell) or #5 (Strong Sell) have some of the worst.

Let's take a look at

Zebra Technologies (ZBRA)

, which was added to the Zacks Rank #1 list on November 5, 2024.

Headquartered in Lincolnshire, IL, Zebra Technologies Corporation is the leading provider of enterprise asset intelligence solutions in the automatic identification and data capture solutions industry throughout the world. The company has a diversified portfolio of product and solutions that includes cloud-based subscriptions and a full range of services like maintenance, repair, technical support, as well as managed and professional services. The products and solutions, which are sold across 180 countries, are designed to help its customers achieve enhanced operational efficiency, increased asset utilization, optimized workflows and improved regulatory compliance. As of 2023-end, it had around 9,750 employees globally.

Five analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $1.31 to $14.04 per share. ZBRA also boasts an average earnings surprise of 10.2%.

Earnings are forecasted to see growth of 43% for the current fiscal year, and sales are expected to increase 8.1%.

Additionally, ZBRA has climbed higher over the past four weeks, gaining 8.4%. The S&P 500 is up 1.7% in comparison.

Bottom Line

With a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Zebra Technologies should be on investors' shortlist.

If you want even more information on the Zacks Ranks, or one of our many other investing strategies, check out the Zacks Education home page.

Discover Today's Top Stocks

Our private Zacks #1 Rank List, based on our quantitative Zacks Rank stock-rating system, has more than doubled the S&P 500 since 1988. Applying the Zacks Rank in your own trading can boost your investing returns on your very next trade. See Today's Zacks #1 Rank List >>

Zacks Investment Research

Investors interested in Industrial Products stocks should always be looking to find the best-performing companies in the group. Has Belden (BDC) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.

Belden is a member of the Industrial Products sector. This group includes 213 individual stocks and currently holds a Zacks Sector Rank of #12. The Zacks Sector Rank considers 16 different sector groups. The average Zacks Rank of the individual stocks within the groups is measured, and the sectors are listed from best to worst.

The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks. This system has a long record of success, and these stocks tend to be on track to beat the market over the next one to three months. Belden is currently sporting a Zacks Rank of #2 (Buy).

The Zacks Consensus Estimate for BDC's full-year earnings has moved 1.3% higher within the past quarter. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

Based on the latest available data, BDC has gained about 53.6% so far this year. Meanwhile, stocks in the Industrial Products group have gained about 17.7% on average. This means that Belden is performing better than its sector in terms of year-to-date returns.

Another Industrial Products stock, which has outperformed the sector so far this year, is Zebra Technologies (ZBRA). The stock has returned 39.9% year-to-date.

For Zebra Technologies, the consensus EPS estimate for the current year has increased 11.8% over the past three months. The stock currently has a Zacks Rank #1 (Strong Buy).

Looking more specifically, Belden belongs to the Wire and Cable Products industry, which includes 3 individual stocks and currently sits at #189 in the Zacks Industry Rank. This group has lost an average of 12.3% so far this year, so BDC is performing better in this area.

On the other hand, Zebra Technologies belongs to the Manufacturing - Thermal Products industry. This 4-stock industry is currently ranked #2. The industry has moved +36.2% year to date.

Investors with an interest in Industrial Products stocks should continue to track Belden and Zebra Technologies. These stocks will be looking to continue their solid performance.

Zacks Investment Research