Canada Markets open in 1 hr 9 mins

Logitech (LOGI) to Post Q3 Earnings: What Lies in Store?

Zacks Equity Research

Logitech International S.A. LOGI is scheduled to report third-quarter fiscal 2020 results on Jan 20.

For the fiscal third quarter, the Zacks Consensus Estimate for revenues is pegged at $898.5 million, indicating 4% growth from the year-ago quarter’s reported figure. The consensus mark for earnings stands at 81 cents, suggesting a 2.5% year-over-year rise.

Notably, the company’s earnings beat estimates in three of the trailing four quarters by 12.74%, on average.

Logitech International S.A. Price and EPS Surprise

Logitech International S.A. Price and EPS Surprise

Logitech International S.A. price-eps-surprise | Logitech International S.A. Quote

In the last reported quarter, the company’s adjusted earnings of 50 cents per share missed the Zacks Consensus Estimate by 1.96% but increased from the year-ago quarter’s 49 cents.

Moreover, net sales of $720 million missed the consensus mark by 0.83% but rose 4% year over year on a reported basis. Revenues were up 6% at constant currency.

Let’s see how things are shaping up for the upcoming announcement.

Key Factors

Logitech’s fiscal third-quarter performance is likely to have benefited from growth in its video collaboration business, driven by the rising traction of Rally, which is a camera system for large conference rooms, and Tap, which is a one-touch controller. Moreover, continued traction in the company’s huddle room MeetUp products is expected to have driven sales in this segment.

Additionally, throughout the quarter, the company took steps like product launches and upgrades to boost its Gaming segment. These are likely to have augmented the segment’s revenues and recovered it from a tepid fiscal second quarter.

Furthermore, demand for its gaming products is likely to have increased during the quarter to be reported, owing to the growing popularity of eSports.

Also, the worldwide PC market maintained its bullish run in the December quarter, courtesy of the companies transitioning to Microsoft’s MSFT latest Windows 10 software. This bodes well for Logitech, as its PC peripheral equipment sales are significantly dependent on PC shipments.

Further, the emergence of numerous content creators is raising demand for applications in Logitech’s Creativity & Productivity segment.

Moreover, the mobile speakers segment, which put up a dismal show in the fiscal second quarter, is likely to have stabilized in the quarter to be reported.

However, upon the implementation of List 4A tariffs on Sep 1, a negative sequential impact of 1 basis point is likely to have weighed on margins.

Additionally, currency volatility might have been an overhang on the company’s gross margin.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Logitech this time around. The combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP increases the odds of an earnings beat. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Logitech currently carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Check Point Software Technologies CHKP has an Earnings ESP of +0.90% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palo Alto Networks PANW has an Earnings ESP of +1.18% and a Zacks Rank #3.

Free: Zacks’ Single Best Stock Set to Double

Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.

See 5 Stocks Set to Double>>