Zebra Technologies (ZBRA): 2019 Top Picks' Mid-Year Update

07/12/2019 5:00 am EST


Richard Moroney

Editor, Dow Theory Forecasts

Richard Moroney, editor of Dow Theory Forecasts, selected Zebra Technologies (ZBRA) as his top investment idea for 2019. The stock has since risen 31.5%. Here's his latest update on the tech services firm.

Zebra Technologies shares have slumped 16% from their April high, swept up in the broad slump for technology stocks as the trade war between the U.S. and China intensifies.

Zebra makes computer printing and tracking produces, such as smart label printers and card readers. The firm produces most of its goods in China, Mexico, and Brazil.

Last year, few of Zebra’s imports from China were affected by tariffs, and management’s 2019 outlook already includes a modest level of tariffs on certain products. The company doesn’t break out sales by country, though the Asia-Pacific region accounted for just 10% of 2018 sales.

Nevertheless, Zebra boasts a strong track record for growth, with per-share profits, sales, operating cash flow, and free cash flow up at double-digit rates in the 12 months ended March. Its operating profit margin has expanded in 12 straight quarters, though at a slower pace recently.

Consensus per-share-profit estimates for 2019 and 2020 have edged higher in recent months, with growth forecast at 14% for 2019 and 8% for 2020. Zebra, expected to post June-quarter results on July 30, remains a Focus List Buy and a Long-Term Buy.

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