Zebra Technologies Corporation ZBRA stock has soared 75% during the last year as the automation technology company rebounds following its Covid-driven boom and bust cycle.
ZBRA posted a beat-and-raise quarter in late October, citing “continued momentum in demand” from its clients ranging across manufacturing, energy, logistics, and beyond. Zebra Technologies’ growth outlook is strong, boosted by a resilient U.S. economy, highlighted by booming data center expansion, infrastructure spending, and reshoring.
ZBRA stock has doubled the S&P 500 during the past 10 years and crushed its Industrial Products sector. Yet, Zebra Technologies stock trades 30% below its records even as the market is at all-time highs and appears a bit frothy in the near term.
Why ZBRA is an Under-the-Radar Stock to Play Key Megatrends
Zebra Technologies helps boost the productivity of frontline workers in the modern, digital-everything world. ZBRA makes handheld computers, wearables, tablets, scanners, vehicle-mounted tech, interactive kiosks, and much more alongside multiple software solutions.
Zebra Technologies products are essential in the tech-driven economy, with its various equipment and software utilized across healthcare, manufacturing, energy and utilities, warehouse and distribution, retail, and beyond.
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Zebra Technologies plays a critical role since its various customers must utilize the most advanced tech to operate these days where nearly every pocket of the economy is supported by digital tech, from sorting warehouses to working on telecom equipment and mining operations.
Zebra Technologies grew its third quarter revenue by 31%, with double-digit sales growth across all vertical markets. Digging deeper, U.S. sales climbed 47%, with North American sales up 22%, led by mobile computing and printing.
Its other regions performed well, highlighted by strength in Southeast Asia and India. Zebra Technologies also critically experienced stabilization in China.
Zebra Technologies boosted its gross margin by over 4% last quarter to 48.8% and completed its restructuring actions. Some of its streamlining efforts included consolidating its North American distribution centers into a single Chicago area facility.
Zebra Technologies boosted its adjusted earnings by 301% in Q3 against what looks to be the bottom of its business cycle.
ZBRA’s Growth Outlook
The digital solution provider offered upbeat guidance. “We have increased our full year outlook for profitable growth to reflect our recent performance and continued momentum in demand,” ZBRA CEO Bill Burns said in prepared Q3 remarks in late October.
“We continue to be well positioned to advance our industry leadership with our innovative solutions that digitize and automate our customers’ workflows across the supply chain.”
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Zebra Technologies is projected to grow its revenue by 8% in 2024 and add 6% to the top-line next year to climb from $4.58 billion in FY23 to $5.25 billion in FY25.
Better yet, ZBRA is projected to boost its adjusted earnings by 43% in 2024 and 14% next year to climb from $9.82 last year to $15.97 a share in FY25.
ZBRA’s Q4 earnings estimate has popped 17% since its Q3 release, with its estimates for 2024 and 2025 up 10% and 5%, respectively.
ZBRA’s upward earnings revisions earn Zebra Technologies a Zacks Rank #1 (Strong Buy) and extend a rebound that began in early 2024.
Understanding ZBRA’s Performance, Valuation, and Technical Levels
ZBRA stock has soared roughly 1,500% in the last 25 years to blow away its Industrial Products sector’s 360% and the S&P 500’s 370%. Shares of Zebra Technologies have also climbed 450% in the last 10 years to roughly quadruple its sector and double the benchmark.
The impressive outperformance came even though ZBRA stock is down 33% from its December 2021 records. During this time, the S&P 500 is up nearly 30% and the Industrial Products sector popped 25%.
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Thankfully, ZBRA is on the comeback trail, with the stock ripping 75% higher in the last year to trade at 52-week highs.
Zebra Technologies has retaken its 200-week moving average and its 21-and 50-month. ZBRA isn’t that overheated either in terms of RSI levels. On top of that, Zebra Technologies trades near its five-year median at 27.6X forward 12-month earnings.
Buy Zebra Technologies Stock Down 33% from its Highs for Long-Term Upside?
Zebra Technologies stock might continue to build on its recent momentum as Wall Street looks ahead to its solid earnings and revenue growth. It is worth stressing that investors are starting to search for strong stocks that have plenty of near-term upside while the broader market starts to appear a little overheated.
On top of that, ZBRA stands to benefit from key megatrends across the U.S. and global economy by selling an array of products and software that become more essential by the day.
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