Logitech International LOGI reported third-quarter fiscal 2020 results, wherein both bottom and top lines surpassed estimates.
Non-GAAP earnings came in at 84 cents per share, surpassing the Zacks Consensus Estimate of 77 cents. The bottom line also improved from the year-ago quarter’s 79 cents.
Net sales of $903 million surpassed the consensus mark of $899 million and rose 4% year over year in dollars and 5% at constant currency. The year-over-year increase stemmed from strong growth in Gaming, Video Collaboration and PC peripheral segments.
Logitech International S.A. Price, Consensus and EPS Surprise
Logitech International S.A. price-consensus-eps-surprise-chart | Logitech International S.A. Quote
Logitech’s Gaming segment’s sales grew 15% year over year to $245.74 million.
Video Collaboration sales witnessed a 24% rally to $91.96 million.
Mobile Speakers’ sales, however, fell 3% to $92.97 million.
Audio & Wearables segment sales declined 17% year over year to reach $81.93 million. Smart Home segment sales fell 19% year over year to $15.79 million.
Logitech’s Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Revenues from Pointing Devices, and Keyboards and Combos grew 4% and 8% year over year, respectively. However, revenues from PC Webcams, and Tablet and Other Accessories declined 3% and 13%, respectively.
The company did not report any revenues from the Other segment in the quarter.
Margins & Operating Metrics
Non-GAAP gross profit rose 3% year over year to $339.61 million. Non-GAAP gross margin, however, contracted 50 basis points (bps) from the year-ago quarter to 37.6%. The impact of tariffs remained an overhang on margins.
Non-GAAP operating expenses inched up 0.8% to $187.97 million.
Non-GAAP operating income climbed 5.9% to $151.65 million. Operating margin of 16.8% expanded 20 bps.
As of Dec 31, 2019, Logitech’s cash and cash equivalents were $656.05 million compared with $574.5 million in the previous quarter.
Additionally, the company generated operating cash flow of $181.12 million in the fiscal third quarter compared with $106.5 million in the prior quarter.
Logitech reaffirmed view for fiscal 2020. The company expects non-GAAP operating income of $375-$385 million.
Revenue growth is anticipated in the mid to high-single-digit range at constant currency.
Zacks Rank & Key Picks
The company currently has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are ManTech International Corporation MANT, SYNNEX SNX and Silicon Motion Technology Corporation SIMO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for ManTech, SYNNEX and Silicon Motion is currently pegged at 8%, 12% and 7%, respectively.
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