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Zebra Technologies Just Showed Its Racing Stripes

By Anders Bylund - Feb 12, 2021 at 6:21AM

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The data management and barcode scanner specialist left analysts flat-hoofed in the fourth quarter.

Enterprise asset data expert Zebra Technologies (ZBRA 4.63%) trotted along with a spring in its step through the fourth quarter of 2020. The company crushed analyst estimates across the board, giving the stock another organic boost.

Zebra also laid out a bullish growth plan for 2021 and beyond. Investors embraced the muscular report right away, with Zebra's stock rising as much as 11.7% in Thursday's trading session.

A zebra stands on an open savanna with a barcode mixed into its ordinary stripes.

Image source: Getty Images.

What Zebra Technology does

Best known for its barcode scanners and related supplies, Zebra is taking a leading role in the rise of so-called omnichannel shopping experiences. The company's item-tracking tools pair up with a powerful suite of asset intelligence software, giving Zebra's customers enhanced visibility of its inventories and order flows. The end result is a more efficient supply chain, faster checkout at the point of sale, and a more personalized shopping process for the final customer.

These themes are incredibly relevant in the business world of 2020 and 2021, where companies of every stripe are trying to adapt to omnichannel operations with at least part of the sales process moving online. Zebra's highly automated asset-tracking processes tend to come in handy.

By the numbers

On that note, Zebra's fourth-quarter net sales rose 9.7% year over year to $1.31 billion. Adjusted earnings jumped from $3.56 to $4.46 per diluted share, which works out to a 25% increase. Both of these figures are all-time highs for Zebra, along with record-level free cash flows and earnings before interest, taxes, depreciation, and amortization (EBITDA). Your average Wall Street analyst would have settled for earnings near $3.80 per share on revenues in the neighborhood of $1.25 billion.

The good times are still rolling. Zebra's first-quarter guidance pointed to approximately 27% year-over-year revenue growth and a 65% earnings jump. Full-year sales will slow down to roughly 12% growth. The expected first-quarter surge represents enterprise customers getting back to equipment and software orders after a long period of belt-tightening. We're looking at the release of pent-up demand for Zebra's asset management systems.

A warehouse worker uses a handheld device to scan barcodes on boxes.

Image source: Getty Images.

Zooming out

In the grand scheme of things, Zebra is poised to keep clobbering analyst expectations and delivering shareholder value for many years to come. The coronavirus crisis shone a spotlight on how Zebra's products and services can help other companies automate, organize, and manage their assets and information. This company's importance to the day-to-day operations of many other businesses is only growing over time, and Zebra is not easily replaced.

CEO Anders Gustafsson touched on Zebra's unique market position in a phone call with yours truly this morning.

"Some of our customers had slowed or even shut down their infrastructure investments during the peak of the pandemic and they're now coming back to life," Gustafsson said. "They realize that they need to invest in order to position themselves to compete in the new economy. We are more excited than we have ever been about our market position and the value we can bring to our customers."

The stock reached fresh all-time highs on Thursday, gaining more than 70% over the last 52 weeks. I see no reason why Zebra's winning streak should end in the foreseeable future.

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