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Here's How Zebra Technologies Stampeded All Over Wall Street's Q1 Estimates

By Anders Bylund - May 15, 2018 at 3:07PM

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Demand for high-quality barcode readers is strong and should remain so for years to come. Plus, read exclusive comments from CEO Anders Gustafsson.

Barcode technologies specialist Zebra Technologies (ZBRA -1.47%) reported first-quarter results last week. The company crushed analyst expectations across the board thanks to robust demand across all of its reporting segments and geographical regions. Zebra's shares closed 11.5% higher that day.

Let's have a closer look at Zebra's investor-pleasing report.

Zebra Technologies' first quarter by the numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Net sales

$977 million

$865 million

12.9%

Adjusted net income

$138 million

$72 million

92%

Adjusted earnings per diluted share

$2.56

$1.37

87%

Data source: Zebra Technologies.

Your average Wall Street analyst would have settled for earnings of $2.06 per share on sales near $937 million. Zebra breezed past these estimates with ease.

The larger enterprise visibility and mobility division led the way, with 15% year-over-year sales growth while operating income more than doubled. The asset intelligence and tracking group's revenue growth stopped at 9% and its operating income rose by 24%. In geographic terms, the Europe, Middle East and Africa (EMEA) region saw sales jump 22% higher.

A worker uses a Zebra-branded barcode reader to read a barcode.

Image source: Zebra Technologies.

What's next for Zebra Technologies?

In general, sales are surging alongside expanding profit margins.

"We saw great growth from all our different product lines and we have invested a lot in innovation and making sure we have a fresh portfolio of products and solutions that are resonating with the market," said CEO Anders Gustafsson in a phone call with yours truly. "A particular standout was mobile computing, which was up the most, and that was driven by growth in North America, Latin America, and EMEA."

Digging a little deeper, many older bar code readers are being replaced with newer and better models. Mobile devices that used to run a lightweight version of Microsoft Windows are now seen as legacy models, and Zebra's newer hardware typically runs Android instead. Looking ahead to 2021, wireless network providers are already retiring their old 2G and 3G systems in favor of faster 4G and the upcoming 5G standard. When the aging networks go dark, many legacy devices will be left unconnected to their central data collection and processing systems, paving the way toward a huge wave of expected device upgrades in the next few years.

"If the market doesn't like this quarter, I don't know what we can do to make them happy," Gustafsson told me.

Sounds about right. This company is going places.

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Stocks Mentioned

Zebra Technologies Corporation Stock Quote
Zebra Technologies Corporation
ZBRA
$293.95 (-1.47%) $-4.38

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