Our first idea today is a tech company that beat analysts’ estimates by $0.25 in the last quarter. Our second recommendation is a sale of a previous idea.
Buy: Zebra Technologies Corporation (ZBRA)
From Dow Theory Forecasts
Joining our Buy and Long-Term Buy lists is Zebra Technologies Corporation (ZBRA), aptly named for the barcode scanners, printers, and striped labels it produces. As data analytics becomes increasingly valued by businesses, Zebra also helps customers track packages moving through the supply chain, equipment in factories, and even customers in stores.
The company is benefiting from secular trends in the internet of things (connectivity of household products), e-commerce, and the digitization of health care. Annual operating cash flow and free cash flow rose to record highs in 2017, and both grew more than 25% in the first half of 2018.
Zebra earns a Quadrix® Value score of just 41, dragged down by the shares surging 63% this year. Yet Zebra still seems reasonably valued at more than 15% below the median stock in the S&P 1500 electronic-equipment industry relative to trailing earnings, estimated 2018 profits, and estimated 2019 profits.
The stock also earns excellent Quadrix ranks for Momentum (97) and Earnings Estimates (96). Supported by healthy corporate-spending trends on technology, the consensus expects Zebra to report 39% higher per-share profits in the September quarter on 14% revenue growth.
Richard Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, October 8, 2018