Please ensure Javascript is enabled for purposes of website accessibility

Why Zebra Technologies Stock Surged Higher in February

By Lee Samaha - Mar 2, 2021 at 8:09AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The data-capture company continues to please investors by exceeding its own guidance.

What happened

Shares of Zebra Technologies (ZBRA 3.87%), which makes barcode scanners, printers, and handheld readers, surged by 28.8% in February according to data from S&P Global Market Intelligence. The move follows an excellent earnings report released in the middle of the month.

Zebra's solutions are based on helping businesses improve productivity. Key end-market customers include the manufacturing sector, transportation, and logistics, retail, and e-commerce companies. Using Zebra's barcode printers and data capture tools (scanners and readers) its customers can better manage and monitor their inventory and point-of-sale operations.

Logistics workers using scanners.

Image source: Getty Images.

The company was hit hard by the pandemic as customers held back from orders while their own operations were shut down. However, the recovery is happening a lot faster than most expected.

For example, Zebra started the fourth quarter expecting adjusted net sales to increase by 3% to 7%, only for the actual figure to come in at 9.7%.

Moreover, management expects adjusted net sales to rise by a whopping 25% to 29% in the first quarter on a year-over-year basis. For the full year 2021 adjusted net sales are expected to rise 10% to 14% with underlying sales (adjusted for an acquisition and foreign currency movements) expected to be up 7% to 11%. Investors in Zebra can feel confident in management's guidance because its rival Honeywell International also reported a very good set of results and gave a good outlook on its productivity solutions and services business.

So what

The excellent results and outlook signal that the market is recovering at a good rate from the impact of the pandemic. Besides, the pandemic may well spur customers to prioritize investment in automation as a way to avoid future problems. That's good news for Zebra and Honeywell as it will encourage investment in data capture and barcode scanners as automated processes still need to be monitored by humans.

Now what

Given the recent history of exceeding sales guidance on quarterly earnings calls, investors will be looking for more of the same in the future. A good place for Zebra investors to start would be by keeping an eye out for what Honeywell says about its productivity solutions business when management gives its presentations. That's something to keep an eye out for in 2021.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Zebra Technologies Corporation Stock Quote
Zebra Technologies Corporation
ZBRA
$308.91 (3.87%) $11.50
Honeywell International Inc. Stock Quote
Honeywell International Inc.
HON
$180.02 (3.12%) $5.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.