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Here’s Why You Should Add Zebra Technologies (ZBRA) Now


We believe that Zebra Technologies Corporation ZBRA is a solid choice for investors seeking exposure in the machinery space. Innovation of new products, solid demand and focus on development of core operations is working in favor of the company.

The stock, with $7.5 billion of market capitalization, has been upgraded to a Zacks Rank #1 (Strong Buy) on Mar 10. Its investment appeal is further accentuated by a VGM Score of A.

Zebra Technologies delivered better-than-expected earnings in the last four quarters, recording an average positive earnings surprise of 7.24%. Notably, the company’s shares have rallied 33.2% in the last three months, outperforming 11.4% gain of the industry it belongs to.

Why the Upgrade?

We are providing a snapshot of how Zebra Technologies fared in the fourth-quarter of 2017. Its earnings of $2.33 surpassed the Zacks Consensus Estimate by 9.91% and also grew 20.7% over the year-ago quarter’s tally. Net sales were up 8.7% on the back of solid product demand. On a geographical basis, results were impressive in Latin America, North America and EMEA. Further, the company’s efforts of restructuring its debts consummated in 2017, lowering pre-tax interest rate by 2% in the year.

For 2018, Zebra Technologies anticipates gaining from healthy product demand and improvement in Chinese operations. Net sales in the year are predicted to grow 4-7%, including 2% gain from favorable foreign currency movements. Free cash flow generation will be approximately $475 million. In the first quarter of the year, net sales will increase 7-10% year over year, including forex gains of 2.6% while non-GAAP earnings is likely to range within $1.95-$2.15. Solid order backlog and lower tax rates will benefit the bottom line.

Th company remains focused on developing new products and building healthy relationships with customers. These efforts are directed toward enhancing its core operations —mobile computing, scanning, printing and other services — and strengthening businesses in transportation & logistics, retail/e-commerce, healthcare and manufacturing end-markets. Recently, the company has introduced new set of intelligent printers — ZD420-HC and the ZD620-HC — designed for the healthcare industry. These printers are powered by software, Print DNA.

In the last 30 days, earnings estimates for Zebra Technologies have been revised upward by seven brokerage firms for 2018 and by four for 2019. The Zacks Consensus Estimate is pegged at $9.10 for 2018 and $9.64 for 2019, reflecting increase of 15.5% and 16.7%, respectively, from their tallies 30 days ago. Further, the stock has an Earnings ESP of +1.92% for 2018 and +2.54% of 2019. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zebra Technologies Corporation Price and Consensus

Zebra Technologies Corporation Price and Consensus | Zebra Technologies Corporation Quote

Other Stocks to Consider

Other stocks worth considering in the machinery space include Applied Industrial Technologies, Inc. AIT, Dover Corporation DOV and John Bean Technologies Corporation JBT. While both Applied Industrial and Dover sport a Zacks Rank #1, John Bean Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies delivered an average positive earnings surprise of 10.97% in the last four quarters. Also, earnings estimates for fiscal 2018 (ending June 2018) and fiscal 2019 (ending June 2019) were revised upward over the last 60 days.

Dover Corporation delivered an average positive earnings surprise of 7.26% in the trailing four quarters. Further, bottom-line expectations for 2018 and 2019 improved over the past 60 days.

John Bean Technologies’ financial performance was impressive, with an average positive earnings surprise of 8.25% in the last four quarters. Moreover, earnings estimates for 2018 and 2019 were revised upward over the last 60 days.

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