On Mar 6, 2014, we issued an updated research report on
Logitech International SA
). The company had earlier reported better-than-expected
quarterly results. Moreover, it witnessed strong growth in tablet
accessories across all its operating regions in the Americas and
Asia except EMEA (Europe, the Middle East and Africa).
Logitech has delivered positive earnings surprises in each of
the last four quarters, with an average beat of 127.9%. Moreover,
Logitech delivered robust earnings in the third-quarter of fiscal
2014 which not only surpassed the Zacks Consensus Estimate but
also increased 84% on a year-over-year basis.
On Mar 7, 2014, management also provided an encouraging
outlook for fiscal 2014 and 2015. 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 billion.
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's cost-cutting and restructuring initiatives are
reaping expected benefits. It implemented measures like staff
reduction and revamping the product portfolio across all its
businesses, especially its LifeSize business which is showing a
healthy improvement earlier than expected.
The company's three-year turnaround plan is designed to reduce
costs while driving up profits and margins significantly. In the
third quarter of fiscal 2014, Logitech successfully reduced
operating costs to maintain its operating profit margin at
Per its turnaround plan, Logitech has been working on its core
business structure including its designing, manufacturing and
distribution system to improve its operational efficiency
significantly. In the third quarter, the company's adjusted
operating expenses went down for the first time in a five-year
period. Despite the decline, the company reported 18% sequential
growth in revenues reflecting the success of its operational
Further, the company's endeavor to return cash to its
investors in the form of dividend payments also boosts investors'
Logitech currently carries a Zacks Rank #1 (Strong Buy).
Key Picks from the Sector
Other stocks that are worth considering in this sector are
Computer Sciences Corp.
), all three of which carry a Zacks Rank #2 (Buy).
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HEWLETT PACKARD (HPQ): Free Stock Analysis
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LOGMEIN INC (LOGM): Free Stock Analysis
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