This week’s Stock of the Week helps companies in many different industries manage an ever-increasing flow of data.
Zebra Technologies Corporation (ZBRA) makes automatic identification and data capture (AIDC) products—such as barcode readers and similar devices—and sells them worldwide to companies in the retail, e-commerce, transportation, logistics, manufacturing, health-care, hospitality, warehouse, energy and other industries. Its products help businesses manage data quickly and easily.
In 2014, it paid $3.5 billion to acquire its larger rival, Motorola Solutions’ Enterprise business, known as Motorola Mobility, and has been integrating the acquisition ever since. Zebra is deeply involved in all aspects of receiving, packaging and shipping products, which requires barcode scanners and printers and other related products. It also services AIDC products and offers technical support. Amazon.com and similar powerhouse companies are deeply dependent on these AIDC products and services.
Zebra Technologies is rapidly paying down debt and generating increasing cash flow—it has a 7.7% free-cash-flow yield and 15% free-cash-flow return on invested capital. As paying down of the debt taken on for the Motorola acquisition continues, earnings will grow even faster than revenue—which was $3.7 billion last year and will likely be $4.1 billion this year and $4.4 billion in 2019.
Fiscal year: December. Earnings per share: 2019 est./$11.31…2018 est./$10.30…2017/$7.05.
Dennison T. (Dan) Veru is co-chairman and chief investment officer of Palisade Capital Management, LLC, Fort Lee, New Jersey, which has $3.7 billion under management. PalisadeCapital.com