ZBRA - Zebra Technologies: Valuations Not Supported With Current Earnings Growth

2024-05-24 11:06:43 ET

Summary

• Zebra Technologies Corporation is a provider of enterprise asset intelligence solutions in the electronic equipment and instruments industry.
• The company operates through two main business segments: Enterprise Visibility & Mobility and Asset Intelligence & Tracking.
• Zebra Technologies has higher gross and operating margins than industry averages, but the current valuation is too high for the potential growth.

Investment Summary

Businesses in the electronic equipment and instruments industry suffer from "commodity-economics", presenting challenges for the intelligent investor. Those with a "commodity - product" have offerings that are undifferentiated in any customer orientated way, just like a commodity, such as nickel or oil.

Typically, substantial excess supply exists within these markets, meaning prices are determined by competition alone, and because there are ample substitutes, buyers care little about product or distribution choices. You see this in the auto mechanic industry, for example - customers want the cheapest option. Consequently, returns on capital are at best, average....

For further details see: