Zebra Technologies (NASDAQ: ZBRA) provides
printers, supplies and software used to produce bar codes, text and graphics on labels, cards, receipts, tickets and tags. It also makes EPC-compatible radio frequency identification (RFID) smart label printers/encoders for firms required to comply with major retail and government mandates. The company's products are used by businesses and governments in over 100 countries around the world, including more than 90% of the firms in the Fortune 500. Major clients include AMR Corporation (NYSE: AMR), Caterpillar (NYSE: CAT) and Kimberly-Clark (NYSE: KMB).
The Street was surprised late last month, when the company reported Q4 EPS of 45 cents and revenues of $233.6 million. Analysts had been looking for 43 cents and $226 million. Management also guided Q1 EPS to 36-44 cents (42 cent consensus) and Q1 revenues to $238-$255 million ($232.78M consensus). The Board authorized the purchase of an additional three million common shares.
The stock
popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys", two "buys" and two "holds". Analysts expect a 16% average annual growth rate, through the next five years. The ZBRA Price to Book ratio (2.49), Price to Free Cash Flow ratio (17.15), Net Profit Margin (12.68%) and Return on Assets (11.03%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $27.50 and $42.50. A stop-loss of $28.70 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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