ZEBRA TECHNOLOGIES CORP-CL A (NASDAQ:ZBRA) Presents a Compelling Value Investment Case

ZEBRA TECHNOLOGIES CORP-CL A (NASDAQ:ZBRA) has been identified by a screening process intended to find possible value chances. The method uses ChartMill's fundamental analysis tool, which assesses stocks using five important areas: valuation, profitability, financial condition, growth, and dividend traits. The particular filter used focuses on businesses displaying good valuation measures, those possibly priced under their inherent value, while also holding acceptable results in profitability, condition, and growth. This method fits with basic value investment ideas, where buyers look for stocks priced less than their believed actual value, assuming the core company stays fundamentally healthy.

Valuation Measures

The valuation score of 7 out of 10 implies ZBRA might be priced at a fair, if not reduced, level compared to its financial results and future outlook. This is a basic part of value investing, as a lower buy price compared to inherent value offers a safety buffer.

• The Price/Earnings (P/E) ratio of 18.25 is seen as high on its own. But perspective is important; it is less expensive than 83.87% of similar companies in the Electronic Equipment, Instruments & Components industry, where the average P/E is 33.08.
• Its Price/Forward Earnings ratio of 15.58 is considered a fair price and is more appealing than 81.45% of industry rivals.
• The company seems priced low based on cash flow, with 89.52% of the industry displaying a higher Price/Free Cash Flow ratio.

Financial Condition

With a condition score of 5, ZBRA shows a varied but mostly steady financial situation. A solid financial base is important for value investors, as it lessens the chance of total money loss, a main worry when focusing on possibly ignored companies.

• The company's Altman-Z score of 4.11 shows a low short-term chance of financial trouble.
• Its Debt to Free Cash Flow ratio of 2.55 is a good indicator of ability to pay debts, showing it would need just over two and a half years of cash flow to pay off all debt. This ratio is more favorable than 75% of its industry counterparts.
• Some issues are present related to liquidity, with both its Current Ratio (1.46) and Quick Ratio (1.03) being below a large part of the industry.

Profitability Quality

ZBRA does very well in profitability, getting a high score of 8. For a value investor, steady profitability confirms the business approach and indicates the company has the ability to increase its inherent value over the long term.

• The company shows very good returns, with a Return on Equity (ROE) of 15.15% and a Return on Invested Capital (ROIC) of 10.95%, both doing better than over 84% of industry rivals.
• Margins are strong, with a Profit Margin of 10.56% and an Operating Margin of 15.59%, putting it in the leading group of its field.
• A good and steady Gross Margin of 48.59% further highlights its ability to set prices and operational effectiveness.

Growth Outlook

The growth score of 6 points to a company with a consistent, if not rapid, growth path. While pure value stocks can lack growth, its existence can be a trigger for the market to adjust the stock price nearer to its inherent value.

• The company has displayed strong recent growth, with Earnings Per Share (EPS) increasing by 75.81% and Revenue rising by 19.12% over the last year.
• In the future, analysts predict EPS growth to increase to almost 15% on average in the next few years, while Revenue growth is estimated to be a moderate 6.24%.
• The report states that both EPS and Revenue growth rates are increasing, a good sign for future results.

The detailed fundamental analysis report for ZBRA gives a more detailed look into these measures and their relationships. For investors using a value-focused plan, ZEBRA TECHNOLOGIES presents an interesting case. It mixes a appealing relative valuation with high-quality profitability and a steady financial foundation, all while displaying signals of increasing growth. This description matches the hunt for companies that are not just low-priced, but are priced low relative to their good core business basics.

This review of ZBRA was found using a particular value-focused filter. Investors curious about finding other businesses with similar descriptions can check the predefined Decent Value Stocks screen on ChartMill for more possible finds.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy. All investments involve risk, including the possible loss of principal. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.