Zebra Technologies, a maker of enterprise systems for managing inventory and assets, on Tuesday delivered an earnings beat on in-line sales for the second quarter. It also guided higher for the full year, but only matched analyst expectations. Zebra stock fell after the report.
The Lincolnshire, Ill.-based company earned an adjusted $3.61 a share on sales of $1.29 billion in the June quarter. Analysts polled by FactSet had expected Zebra earnings of $3.34 a share on sales of $1.29 billion. On a year-over-year basis, Zebra earnings increased 13.5% while sales advanced 6.2%.
For the current quarter, Zebra expects to earn an adjusted $3.70 a share on sales of $1.31 billion. That's based on the midpoint of its guidance. Analysts were modeling earnings of $3.41 a share on sales of $1.3 billion for the third quarter. In the same quarter last year, Zebra earned an adjusted $3.49 a share on sales of $1.26 billion.
For the full year, Zebra now expects sales to rise 5% to 7% vs. 2024. The midpoint would result in revenue of $5.28 billion, matching analyst estimates.
Zebra makes hardware and software for digitizing and automating frontline workflows in such markets as retail, health care, manufacturing and transportation.
Trump Tariff Impact Less Than Expected
"Solid demand, excellent execution by our team and lower-than-expected tariffs enabled us to deliver second quarter results that exceeded our expectations," Chief Executive Bill Burns said in a news release. "We are raising both our sales and profitability outlook for the full year, given our solid first-half results and expectation for second-half growth."
Zebra reported about $10 million in U.S. import tariff expense in Q2. It expects a similar tariff impact in the current quarter.
Heading into the quarter, Zebra expected a profit hit of $25 million to $30 million from the Trump administration's tariffs. But a lower tariff rate on China lessened the blow.
For the full year, Zebra now expects a tariff impact of $30 million, down from $70 million previously.
The transportation and logistics market continues to be an area of strength for Zebra, Chief Financial Officer Nathan Winters told Investor's Business Daily. Also, the e-commerce customer segment has picked up, he said. Meanwhile, the manufacturing and health-care segments were weaker.
Zebra Stock Sinks After Q2 Report
On the stock market today, Zebra stock initially jumped but quickly reversed. It ended the regular session down 11.4% to 302.60. With the steep drop, Zebra fell below both its 200-day moving average line and its 50-day line.
In other news, Zebra announced an agreement to buy Elo Touch Solutions for $1.3 billion. Elo makes systems that engage customers, enhance self-service and accelerate automation across retail, hospitality, quick service restaurants, health care, and industrial markets. Elo has annual sales of about $400 million with similar annual sales growth and earnings margin profile as Zebra.
"Elo is a leader in self-serve, point-of-sale kiosk and interactive touch-screen displays (and is) very complementary to our portfolio," Winters said.
The acquisition will expand Zebra's addressable market by about $8 billion, he said.
Zebra Technologies has an IBD Composite Rating of 93 out of 99, according to IBD Stock Checkup. The Composite Rating scores a stock's key growth metrics against all other stocks regardless of industry group.
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