Amidst a dynamic stock market, Zebra Technologies Corp (ZBRA, Financial) has recently experienced a daily gain of 2.26% and a notable 3-month gain of 23.01%. With an Earnings Per Share (EPS) of $8.97, investors are keen to determine whether the stock is fairly valued. This article delves into a valuation analysis to explore the intrinsic worth of Zebra Technologies (ZBRA). Read on for a comprehensive examination of the company's financials and market position.
Company Overview
Zebra Technologies Corp (ZBRA, Financial) is a frontrunner in automatic identification and data capture technology, providing innovative solutions such as barcode printers, scanners, mobile computers, and software to enhance workflow efficiency. Serving key sectors like retail, transportation logistics, manufacturing, and healthcare, Zebra Technologies is dedicated to tailoring solutions to optimize customer operations. With a current stock price of $275.5 and a GF Value of $293.71, an analysis of the company's fair value is essential for investors. The following income breakdown offers a closer look at the financial aspects of Zebra Technologies.
The GF Value Explained
The GF Value is a unique metric, reflecting the intrinsic value of a stock based on historical trading multiples, an adjustment factor from GuruFocus for past performance, and projected business growth. This value serves as a benchmark for what the stock should ideally trade at. When Zebra Technologies (ZBRA, Financial)'s stock price significantly deviates from the GF Value Line, it suggests potential overvaluation or undervaluation, influencing future returns. Currently, with a market cap of $14.10 billion, Zebra Technologies appears to be fairly valued, indicating that its long-term return may align closely with its business growth rate.
Given its fair valuation, the stock's future returns are likely to mirror the trajectory of Zebra Technologies' business expansion. For investors seeking opportunities with potentially higher returns at reduced risk, consider exploring these companies.
Link: High Quality & Low Capex CompaniesFinancial Strength Assessment
Before investing, it's crucial to evaluate the financial strength of a company. Zebra Technologies' cash-to-debt ratio sits at 0.03, positioning it lower than 98.25% of its peers in the Hardware industry. With an overall financial strength rating of 6 out of 10, Zebra Technologies maintains a fair financial standing. Below is a visual representation of the company's debt and cash over recent years.
Profitability and Growth Prospects
Investing in profitable companies, particularly those with a consistent track record, generally presents less risk. Zebra Technologies has been profitable for 8 out of the past 10 years, with an operating margin of 15.07%, surpassing 87.29% of companies in the Hardware industry. This indicates a strong profitability profile for Zebra Technologies.
Growth is a vital component of company valuation, as it is closely tied to long-term stock performance. Zebra Technologies boasts an average annual revenue growth of 10.2%, ranking favorably among its industry peers. Furthermore, its 3-year average EBITDA growth rate of 11.2% suggests a solid growth trajectory compared to the competition.
Comparing ROIC and WACC
An effective method to gauge profitability is comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC). Zebra Technologies' ROIC over the past 12 months is 9.95, which is below its WACC of 12.45, suggesting challenges in creating shareholder value. The historical comparison of ROIC vs WACC for Zebra Technologies is depicted below.
Conclusion
Overall, Zebra Technologies (ZBRA, Financial) stock seems to be priced appropriately in the market. The company's financial health is acceptable, and its profitability is robust. Its growth is commendable, outperforming more than half of the companies within the Hardware industry. For a deeper insight into Zebra Technologies stock, you can review its 30-Year Financials here.
For those interested in identifying high-quality companies that may deliver above-average returns, take a look at the GuruFocus High Quality Low Capex Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
