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Logitech (LOGI) Down 2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Logitech (LOGI). Shares have lost about 2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Logitech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Logitech's Q1 Earnings and Revenues Top Estimates

Logitech reported first-quarter fiscal 2022 results, wherein both bottom and top lines surpassed estimates. Non-GAAP earnings came in at $1.22 per share, surpassing the Zacks Consensus Estimate by 23.2%. The bottom line also soared 91% from the year-ago quarter’s earnings of 64 cents per share.

Net sales of $1.31 billion outpaced the consensus mark of $1.19 billion, and surged 66% year over year in dollars and 58%, at constant currency.

Logitech has been benefiting from the elevated demand for its Video Collaboration tools, mainly driven by the heightening work-from-home and learn-from-home trends. Also, the PC peripheral market is witnessing strong traction, which is aiding top-line growth.

Additionally, demand for gaming products has shot up on the growing popularity of online video games and eSports amid the stay-at-home scenario.

Segmental Details

Logitech’s Gaming segment sales soared 84% year over year to $335.4 million. Video Collaboration sales jumped 81% year on year to $334.9 million. Revenues from PC Webcams were up a whopping 81% to $109.9 million, while Tablet and Other Accessories sales surged 72% to $79.3 million.

The Audio & Wearables segment sales jumped an astounding 63% year over year to $116.6 million. Revenues from Pointing Devices increased 52% year over year to $182.9 million. Keyboards & Combos sales grew 50% to $218.4 million. The Other segment revenues skyrocketed 1,660%, year on year, to $88,000 from the year-ago quarter’s $5,000.

However, Mobile Speakers’ sales decreased 2% to $28.5 million. The Smart Home segment sales slid 9% year over year to $6.2 million.

Margins & Operating Metrics

Non-GAAP gross profit climbed 84.9% to $574.4 million from the year-ago quarter’s $310.7 million. Non-GAAP gross margin expanded 460 basis points (bps) from the prior-year quarter to 43.8%.

Non-GAAP operating expenses flared up 75.8% to $339.8 million. As a percentage of revenues, non-GAAP operating expenses shot up to 25.9% from the year-earlier quarter’s figure of 24.4%.

Non-GAAP operating income soared nearly two-fold to $234.5 million from the $117.3 million reported in the year-ago quarter. Operating margin expanded 310 bps points to 17.9%.

Liquidity and Shareholders’ Return

As of Jun 30, 2021, Logitech’s cash and cash equivalents were $1.50BILLION compared with the $1.75 billion recorded in the previous quarter. Additionally, the company used cash flow of $115 million during the fiscal first quarter for operational activities.

During the first quarter of fiscal 2022, the company repurchased shares worth $54.9 million.

During the fourth-quarter fiscal 2021 earnings conference call, Logitech had announced that its board of directors has increased the share-repurchase authorization limit to $1 billion from the $250 million authorized previously.

Under the current authorization, the company has bought back $220 million worth of its common stocks. Therefore, the company has now $780 million remaining total authorization after the increase, which it required to complete through July 2023.

Fiscal 2022 Outlook Reiterated

The company reiterated its projections for revenues and operating income. It still estimates sales to remain flat (+/- 5%) year over year in constant currency. Management also kept the non-GAAP operating income guidance range unchanged at $800-$850 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 8.57% due to these changes.

VGM Scores

At this time, Logitech has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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Logitech International S.A. (LOGI): Free Stock Analysis Report
 
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