Today, Zebra Technologies Corporation has released its 10-K report. The company operates in the automatic identification and data capture solutions industry worldwide, with two segments: Asset Intelligence & Tracking, and Enterprise Visibility & Mobility. Zebra Technologies' shares have moved -3.1% on the market, and are now trading at a price of $275.08.
Zebra Technologies reported a decrease in net sales from $5,781 million in 2022 to $4,584 million in 2023, representing a 20.7% decline. Operating income also decreased from $529 million in 2022 to $481 million in 2023, a 9.1% decrease. Net income saw a significant decline from $463 million in 2022 to $296 million in 2023, a 36.1% decrease. Additionally, Zebra Technologies repurchased $52 million of common shares in 2023 compared to $751 million in 2022.
The company faced headwinds from global cost inflation, rising interest rates, and a stronger U.S. dollar in 2023, negatively impacting its results. Zebra Technologies also undertook restructuring activities, committing to additional actions under the 2022 Productivity Plan, with expected annualized net cost savings of approximately $120 million.
In terms of segment performance, the Asset Intelligence & Tracking segment's total net sales decreased by 10.1% in 2023, while the Enterprise Visibility & Mobility segment's total net sales decreased by 25.6% in the same period.
For more detailed information, you can access the company's full 10-K submission here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,218 | $4,485 | $4,448 | $5,627 | $5,781 | $5,078 |
| Gross Margins | 47% | 47% | 45% | 47% | 45% | 46% |
| Net Margins | 10% | 12% | 11% | 15% | 8% | 9% |
| Net Income (M) | $421 | $544 | $504 | $837 | $463 | $465 |
| Net Interest Expense (M) | $91 | -$94 | $76 | $5 | $15 | -$110 |
| Depreciation & Amort. (M) | $175 | $175 | $146 | $187 | $204 | $178 |
| Diluted Shares (M) | 54 | 55 | 54 | 54 | 53 | 51 |
| Earnings Per Share | $7.76 | $9.97 | $9.35 | $15.52 | $8.8 | $8.98 |
| EPS Growth | n/a | 28.48% | -6.22% | 65.99% | -43.3% | 2.05% |
| Avg. Price | $150.66 | $206.71 | $266.64 | $518.28 | $399.79 | $283.75 |
| P/E Ratio | 19.17 | 20.51 | 28.28 | 33.1 | 45.12 | 31.42 |
| Free Cash Flow (M) | $721 | $624 | $895 | $1,010 | $413 | $50 |
| CAPEX (M) | $64 | $61 | $67 | $59 | $75 | $72 |
| EV / EBITDA | 12.19 | 13.34 | 20.29 | 24.38 | 32.06 | 19.89 |
| Total Debt (M) | $1,591 | $463 | $1,939 | $1,047 | $2,384 | $2,280 |
| Net Debt / EBITDA | 1.97 | 0.5 | 2.22 | 0.61 | 3.11 | 2.63 |
| Current Ratio | 0.89 | 0.85 | 0.69 | 0.94 | 0.81 | 1.06 |
Zebra Technologies is a company with a strong revenue growth rate of 3.1%, wider gross margins at 46%, and a consistent earnings per share growth rate of 2.5% over the last 6 years. These factors indicate a competitive advantage and a potential for sustained profitability. However, the company's capital expenditure trend is flat, and its operating margins are merely in line with the industry average, which may indicate a lack of efficiency in capital allocation and operational management. Additionally, the PEG ratio of 5.31 suggests that the market may be overvaluing the company's growth potential, raising concerns about the stock being fairly valued at its current price.
In terms of value factors, Zebra Technologies has significant total liabilities exceeding its current assets, leading to a net current asset level of -$2.67 billion. While the current ratio indicates that the company has just enough current assets to cover its current liabilities, the leverage level, as indicated by the Net Debt/EBITDA ratio of 2.63, is relatively high. Furthermore, the free cash flows have shown a significant negative compounded average growth rate of -40.5% over the last 5 years, with high year-on-year growth variability. The disproportionate representation of inventories in the current assets also raises questions about the company's working capital management.
At the current price of $275.08, the stock may be fairly valued, but investors should carefully assess the company's ability to manage its liabilities, improve operational efficiency, and deliver sustained positive free cash flows to support its valuation.
