Logitech International SA
) recently provided an encouraging outlook for fiscal 2014 and
2015 on its Analyst and Investor Day on Mar 6, 2014. As a result,
shares of the company move up by 5.8% to close at $16.86
yesterday, reflecting investor confidence in the company.
Logitech expects results in fiscal 2014 to come in above the
higher end of its previously guided range. Hence, pro forma
operating income is estimated at $125 million, the upper end of
the previous guidance of $120-$125 million on sales of $2.1
For fiscal 2015, Logitech expects to generate revenues of
$2.16 billion and pro forma operating income of $145 million,
reflecting a significant increase from the earlier guidance
(provided in May 2013) of $2.1 billion and non-GAAP operating
income of $90 million.
The company also announced that its board of directors has
approved a share buyback program worth $250 million in a
concerted effort to increase returns to its investors.
This Zacks Rank #1 (Strong Buy) company is confident about its
long-term growth on the back of the success of the restructuring
plan initiated in Apr 2012. Since then, the company's share
prices have gained more than 80% till date.The company's
three-year turnaround plan was formulated to reduce costs while
driving up profits and margins significantly.
Logitech has delivered positive earnings surprises in all of
the last 4 quarters, with an average beat of 128%. In the
last-reported quarter (third-quarter 2014), Logitech successfully
reduced the operating costs to maintain its operating profit
margin level at 7%.
The company has been working on its core business structure,
including its designing, manufacturing and distribution system to
improve the operational efficiency significantly. In the quarter,
the company's adjusted operating expenses went down for the first
time in a five-year period. Despite this decline, the company
reported an 18% sequential growth in revenues reflecting the
success of its diligent operational execution.
In 2013, the company launched a number of innovative products
including tablet covers and UE Mini Boom wireless speakers, which
is a miniature version of the innovative high demand product, UE
Boom. The strong demand for the accessories of the new
) iPad Air benefited the company significantly in the last
quarter. The company is also developing the keyboard folios for
the upcoming Samsung Galaxy Pro Tablets.
The growing adoption of new mobile platforms, such as tablets
and smartphones in both mature and emerging markets, are paving
the way for increased demand of Logitech's peripherals and
accessories going forward.
The Zacks Consensus Estimate for fiscal 2014 is currently
pegged at 51 cents per share, reflecting a year over year growth
of 142.9% while the same for fiscal 2015 is estimated to be 52
cents per share, translating to a year over year growth of about
Some other stocks worth considering in the computer and
technology space include
), both carrying a Zacks Rank #2 (Buy).
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