Shares of Logitech International (LOGI 1.00%) have fallen off a cliff over the past year after it emerged that the computer peripherals manufacturer's pandemic-driven sales surge is over.

Logitech's products were in great demand in 2020 as people scrambled to buy computer peripherals to work, learn, or play from home. But those heydays are long gone, and Logitech stock has shed nearly 56% of its value from its 52-week high that it hit on June 9 last year. And now, it appears that the Russia-Ukraine war is going to pose another challenge for the company at just the time when it was expecting to step on the gas.

Logitech released its fiscal 2022 fourth-quarter results for the three months ending on March 31, 2022, on May 2. The numbers make it clear that the tough times endured by the company last year are here to stay. Not surprisingly, investors pressed the panic button, and Logitech stock shed 3% of its value following the results. However, a closer look indicates that there are certain silver linings that could help Logitech stock regain its mojo in the long run.

Person in glasses holding a smartphone and thinking.

Image source: Getty Images.

Logitech investors should look at the bigger picture

Logitech's fiscal Q4 revenue fell 20% year over year to $1.23 billion as the company lapped a period of strong sales growth. The company's revenue had shot up 117% in the fourth quarter of fiscal 2021 last year, so it was facing a tough comparison this time around. The top line also fell slightly short of the $1.24 billion consensus estimate.

The sharp revenue decline led to a big drop in the company's earnings. Logitech reported adjusted earnings of $0.81 per share for the fourth quarter, down 44% from the year-ago period but better than the Wall Street consensus of $0.73 per share.

For the full year, Logitech's earnings dropped 28% to $4.63 per share. However, the company managed to finish the year with a 4% increase in revenue to a record $5.5 billion. It is worth noting that Logitech's revenue increased in fiscal 2022 following a massive jump of 76% in fiscal 2021. So another way of looking at Logitech's performance last year is that it has maintained its higher revenue levels even in a post-pandemic scenario.

The company had delivered $2.98 billion in revenue and adjusted EPS of $2.15 per share in fiscal 2020, which ended on March 31, 2020 -- before the pandemic gripped the world. The good part is that Logitech is sustaining the increased sales brought by the pandemic, as evident from its fiscal 2023 guidance.

Logitech expects sales to grow between 2% and 4% this fiscal year. The company was originally anticipating mid-single-digit revenue growth this year, but the loss of sales in Russia and Ukraine has led it to temper its forecast. But some of Logitech's most important businesses are still growing at a nice pace, and they could help the company step on the gas in the long run.

These growth hot spots are worth watching

Even though Logitech was facing tough year-over-year comparisons in fiscal 2022, the company logged impressive growth in some of its largest businesses.

Gaming, for instance, was a bright spot for Logitech last fiscal year. Sales of gaming peripherals increased 17% last year to $1.45 billion, accounting for 26% of its top line. The global gaming peripherals market could clock a compound annual growth rate of 13% through 2026. In 2021, the gaming peripherals market generated $4.64 billion in sales per third-party estimates. Logitech's revenue from this segment indicates that it controls just over 31% of this market, which means that the company is in a solid position to tap into the incremental revenue opportunity in this segment.

On the other hand, sales of keyboard combos and pointing devices also increased at a nice pace. These two segments together produced $1.75 billion in revenue, accounting for 32% of Logitech's top line. Keyboard combo sales increased 23% last fiscal year, while pointing devices logged 15% growth. The global keyboard market is expected to add $21 billion in revenue over the next four years thanks to the popularity of remote working and online education.

As such, there's a possibility of an improvement in Logitech's bottom line, and analysts also expect the same.

LOGI EPS Estimates for Current Fiscal Year Chart

LOGI EPS Estimates for Current Fiscal Year data by YCharts

All this makes Logitech an ideal turnaround bet for investors given its cheap valuation. This tech stock is trading at just 16 times trailing earnings as compared to its five-year average earnings multiple of 25, and it could reward patient investors once it regains its mojo.