Zebra Technologies Corporation ZBRA stands to benefit from strength across its businesses, focus on operational excellence and acquired assets. The company remains focused on investing in growth opportunities and strengthening its long-term market position.

ZBRA, which has a market capitalization of $20.3 billion, currently sports a Zacks Rank #1 (Strong Buy). Let’s delve into the factors that have been aiding the firm for a while now.

Business Strength: The company has been witnessing growth across the Enterprise Visibility & Mobility segment. Higher sales of mobile computing and data capture solutions are driving the segment’s revenues, which increased 33.7% year over year in the third quarter of 2024. An increase in sales of services and software, driven by retail software wins, is also aiding the segment.

Recovery in demand for printing solutions and RFID products is also boosting the Asset Intelligence & Tracking segment’s performance. In the third quarter, the segment’s sales increased 26.5% on a year-over-year basis. Driven by strength across its businesses, the company expects fourth-quarter 2024 net sales to increase in the band of 28-31% from the prior year.

Cost Management Benefits: Zebra remains focused on cost-management actions. The company’s total operating expenses declined approximately 3.9% year over year in the third quarter, due to its cost-saving actions. Also, ZBRA’s gross margin increased 410 basis points to 48.8%, supported by higher volume, leverage and business mix. 

The company completed its actions under the 2022 productivity plan and employee voluntary retirement plan in the third quarter. These actions have impacted more than 9% of its global employee base, which is likely to generate annualized net cost savings of about $120 million. These efforts are likely to boost margins and produce more fuel to invest in organic growth.

Acquisition Benefits: The company intends to strengthen and expand its businesses through acquisitions. ZBRA’s acquisition of Matrox Imaging (June 2022) enabled it to combine its fixed industrial scanning and machine vision portfolio with the latter’s expertise in the imaging market. Also, its antuit.ai buyout (October 2021) complemented the planning and demand forecasting module for its retail software portfolio.

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In the past year, the company’s shares have surged 45.9% compared with the industry’s 41.7% growth.

Shareholder-Friendly Policies: Zebra has continued rewarding its shareholders. The company repurchased shares worth $16 million and $52 million in the first nine months of 2024 and 2023, respectively. In May 2022, its board of directors authorized a share repurchase program for up to $1 billion. Exiting the third quarter of 2024, the company had $877 million remaining under this program.

Also, while free cash flow was negative in 2023, the company expects the same to be at least $850 million in 2024. This should support its shareholder-friendly policies.