Bar-code design and print firm Zebra Technologies
The 2006 results deserve some further explanation. On the top line, total sales improved a respectable 8.2. Particularly strong sectors included the Europe, Middle East, and Africa region, up 12.9%, and Latin America, up 14.4%. Overall, international sales made up half of Zebra's total and grew nicely; North America makes up the other half, but advanced only 4.9%.
That seems straightforward so far, but during the fourth quarter, Zebra recorded a hefty charge to reserve for an insurance receivable. In September, it took an even heftier $63.8 million charge as it settled a patent dispute with rival Paxar
2007 should be better, as analysts on average expect $1.75 in earnings, and Zebra continues to throw off significant free cash flow, even though it also fell year over year. It also avoids long-term debt and has decent international growth prospects, with an overall compelling business model that consists primarily of selling bar code printers and supplies that must be purchased year after year.
I keep an eye on Zebra, because it has grown steadily over the years and generates solid cash flow. But right now, growth is slowing, and cash flow trends have been uneven as of late. The wild card is the company's exposure to radio frequency identification (RFID) technology, with the much-touted potential to tag and track nearly any product, from clothing to cosmetics to beverages.
Retail behemoth Wal-Mart
Zebra already makes and markets a number of RFID-related printers and coders, and the technology fits well with its core bar-code business. But until the burgeoning market helps inject some more growth into the company, I find Zebra shares a bit pricey at current levels. That said, I could change my stripes on any pullback.
For related Foolishness:
- These Stocks Beat Your Stocks
- What's the Frequency, Paxar?
- Foolish Forecast: Zebra Saddles Up
- Zebra Runs Wild: Fool by Numbers
Paxar is a recommendation of Motley Fool Hidden Gems. A 30-day free trial lets you understand why label making should equal market-beating performance.
3M and Wal-Mart are Inside Value picks. Find more top-notch companies trading at tempting valuations with a free 30-day trial to Philip Durell's premium newsletter service, Motley Fool Inside Value.
Fool contributor Ryan Fuhrmann is long shares of Motorola but has no financial interest in other company other mentioned. Feel free to track him via the latest RFID technology, or email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
More from The Motley Fool
Zebra Technologies Stock Upgraded: Is This the Best Internet of Things Stock?
Imperial Capital bets on a pure-play leader in IoT.
Here's How Zebra Technologies, Corp. Trots Toward Stronger Profits
The RFID and barcode expert is paying down more than $3 billion of buyout-related debt, using cash generated by the business it bought.
Why Zebra Technologies Corp's Shares Popped 14% Today
A better than expected earnings report pushed shares higher, but there's more than meets the eye.