Zebra has strong financials with robust revenue growth, high margins, and growing share marginality of EVM revenue stream. Company has made gradual deleverage of BS and ready to distribute strong FCF to extend current buyback program. Furthermore, relatively high FCF yield maintains by low capital expenses.
Zebra modestly says that they are the market leader in barcode scanning, specialty printing, and RFID printing, among other things, but they are clearly market dominators in the spaces they run in due to intensive M&A strategy and deep expertise in fields they are running.
Moreover, the global radio-frequency identification (RFID) tags market is expected to grow from $10.53 billion in 2020 to $12.21 billion in 2021 at a compound annual growth rate (CAGR) of 16%. The market is expected to reach $18.94 billion in 2025 at a CAGR of 11.6%.
Recent acquisitions of Antuit.ai, Fetch robotics, Reflexism and others help to expand the usage of AI and machine learning in the Zebra’s product portfolio and made it more compatitive. Integration between the services gives customers clear insights around current inventory levels such as stock unavailability, executions on workforce and task management. On the other hand AI helps forecasts on demand for inventory after accounting for regional events across the country (such as back-to-school retail), and algorithms that design machine vision technology for the workflow.
Zebra remains our one of the best secular growth stocks benefiting from a clear growth opportunities and overall industry robotization.
We overweight ZBRA due to high exposure to long-term secular trends, strong financials and rapid growth through acquisitions, which still provides reasonable upside regardless of short-term risks of supply chain disruptions and chip-shortage.
See our full article on Seeking Alpha: Zebra Technologies: More To Come Despite The Premium Valuation