Zebra Technologies shares plummet after slowing growth

The keywords automation and artificial intelligence are on everyone’s lips. Above all, the data acquisition area and its further processing can be significantly improved with artificial intelligence (KI for short). One player in this field is the US group Zebra Technologies, which in recent years has been able to score with enormous growth rates. However, investors were not at all happy with the business development data just presented. Investors dropped the paper like the proverbial hot potato. Immediately after the numbers, the stock closed with a drop of 15% on the day.

Zebra technology: the specialist for data acquisition and processing

Even though the company is somewhat unknown in this country, Zebra Technologies is no longer a startup. The company was founded in 1969 and today employs over 9,800 people. The Illinois-based company specializes in manufacturing barcode printing and scanning technologies.

The company is also a provider of corporate asset intelligence and builds applications for the control of machines and work processes. Examples of these products and work processes are data acquisition systems such as printers, barcode readers, as well as real-time tracking systems and radio frequency monitoring modules.

Data availability drives automation

Zebra Technologies is taking advantage of the wave of automation that is spreading across numerous industries. The proliferation of IT and web-based automation in retail, logistics and manufacturing means that more and more data needs to be collected and analyzed. This is where Zebra products come into play.

Laptops and RFID (radio wave identification) devices collect a lot of data in real time, which helps companies monitor their robots and increase productivity. So much so that even National Football League (NFL) players are equipped with RFID tags to monitor their performance in real time.

Strong expansion in recent years …

With its positioning, the US group has been able to achieve impressive growth rates in recent years. Since 2014, sales have grown from $ 1.67 billion to $ 5.62 billion in 2021. At the same time, profits have improved from $ 32 million to $ 837 million.

…. but a decline in growth in the third quarter

Recently, however, things got stuck in the gears: due to supply chain problems, third-quarter sales fell 4.2% to $ 1.38 billion. Earnings adjusted before interest, taxes, depreciation and write-downs also decreased 6.7% year-on-year to $ 291 million. As a result, the EBITDA margin (note: EBITDA in relation to sales) was 21.1% and thus 0.6 percentage points below the level of the previous year. In the end, earnings per share were $ 4.12 on the company’s books.

Analysts perceive the recovery potential

Meanwhile, analysts are optimistic. Bankers expect earnings per share to increase to $ 18.97 in 2023 from $ 17.32 in 2022. This puts the price-to-earnings ratio at 12. With a current stock market value of $ 12 billion, Zebra is also valued at double the sales forecast for 2023. This is enough for analysts to certify that the stock has strong upside potential. The average price target of the 14 analysts dealing with the stock (source: Marketwatch) is about 50% above the current price level of $ 344.

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