Logitech Int S.A. (LOGI) - The only way is up

The Chart of the Day belongs to the computer hardware company Logitech (LOGI).

The company

Logitech International S.A. and its subsidiaries specialize in creating and distributing a wide range of products that enhance the experience of working, creating, gaming, and streaming for people globally.

Their portfolio includes wireless and wired pointing devices like mice; diverse keyboards including those for living rooms and mobile devices, PC webcams; and a variety of mobile device accessories.

They also offer gaming and simulation gear such as gamepads, steering wheels, headsets, and simulation controllers, along with services for streaming like Streamlabs. Logitech’s video conferencing solutions include high-quality ConferenceCams, desktop webcams, and headsets, transforming any space into a collaborative environment.

Additionally, they provide audio products like portable Bluetooth and Wi-Fi speakers, PC speakers and headsets, microphones, in-ear headphones, and wireless audio wearables.

Their products are available through a network of distributors, retailers, e-tailers, specialized stores, resellers, and online platforms, sold under brands such as Logitech, Logitech G, ASTRO Gaming, Streamlabs, Blue Microphones, and Ultimate Ears.

Founded in 1981, Logitech International S.A. has its headquarters in Lausanne, Switzerland.

Technical and Fundamental Indicators

Key data

• Previous Close: 81.56

• Volume: 604,200

• Avg Vol: 668,470

• Stochastic: %K93.73%

• Weighted Alpha:+48.70

• 5-Day Change: +2.87 (+3.65%)

• 52-Week Range: 50.26 - 82.21

Fundamentals

1. Market Cap $12.28 billion

2. P/E 26.65

3. Revenue is expected to grow another 7.00% next year

4. Earnings are estimated to increase an additional 25.10% next year and continue to compound at an annual rate of 10.35% for the next five years

• Shares Outstanding, K158,147

• Annual Sales, $4,539 M

• Annual Income, $364,580 K

• 60-Month Beta 0.76

• Price/Sales 2.82

• Price/Cash Flow 23.79

• Price/Book 6.16

• Price/Earnings ttm 28.00

• Earnings Per Share ttm 2.89

• Most Recent Earnings on 10/23/23: Logitech Non-GAAP EPS of $1.09 beats by $0.45, revenue of $1.06B beats by $83.29M

Analysts and Investor Sentiment

• Wall Street analysts rate 1 strong buy, 2 buy, 6 hold, and 1 sell opinion on the stock.

• Analysts' price targets are between $55 and $96, with a consensus of $78.76

• The individual investors following the stock on Motley Fool voted 885 to 66 for the stock to beat the market, with the more experienced investors voting 197 to 14 for the same result.

• Highest Value Line Rating of 1  

• CFRAs MarketScope rates it a hold

• Appr. 18,000 investors monitor the stock on Seeking Alpha

Latest earnings snapshot from 23 October 2023

• Logitech press release: Q2 Non-GAAP EPS of $1.09 beats by $0.45.

• Revenue of $1.06B (-7.8% Y/Y) beats by $83.29M.

• Sales were $1.06 billion, down 8 percent in US dollars and 9 percent in constant currency, compared to the prior year.

• FY24 Guidance:

• Raises sales guidance to $4.0B-$4.15B ($4.04B consensus) from prior guidance of $3.8B-$4.0B

• Raises Non-GAAP operating income to $525M-$575M from prior guidance of $400M-$500M.

Logitech (NASDAQ: LOGI) experienced a roughly 10% surge in its stock during Tuesday's pre-market trading. This increase followed the announcement of second-quarter results that surpassed expectations and an improved forecast for fiscal year 2024.

The company reported a 29.7% year-over-year increase in non-GAAP EPS, reaching $1.09. Despite a roughly 8% decrease in net sales year-over-year (9% in constant currency) to approximately $1.06 billion, both revenue and earnings exceeded analyst predictions.

Interim CEO Guy Gecht expressed satisfaction with the company's progress, highlighting surpassing pre-pandemic profit levels. Amidst its ongoing search for a new CEO, Logitech revealed that its board is in the advanced stages of selecting a candidate after considering several prospects.

During the quarter, Logitech observed market share growth in Keyboards & Combos, Pointing Devices, and Webcams. Revenue showed a sequential increase from $974.5 million in Q1 2024.

The Gaming segment, however, saw a 12.4% year-over-year decline in net sales to roughly $282.1 million, mainly attributed to decreases in PC Gaming and Simulation. Yet, these categories showed sequential revenue growth.

Sales in Keyboards & Combos dipped by about 3% year-over-year to around $194.91 million, whereas Pointing Devices sales rose by approximately 3% to $191.7 million. The company also noted market share growth in these segments for Q2.

In contrast, sales in the Video Collaboration segment dropped around 15% year-over-year to about $152.4 million but improved sequentially. Similarly, Webcam sales decreased by about 14% to $88.2 million, though they have risen sequentially for two consecutive quarters.

Tablet accessory sales increased by about 17% to $63.7 million, driven by robust demand in the education sector.

The non-GAAP gross margin stood at 42%, a 340 basis point improvement compared to Q2'23 and a 300 basis point increase from the previous quarter.

Looking ahead, CFO Chuck Boynton emphasized the effectiveness of their cost discipline and customer-focused approach, leading to growth in key areas. With cautious optimism for the remainder of the year, the company revised its annual outlook upwards. It now expects FY'24 sales to range between $4.0 billion and $4.15 billion, up from the earlier forecast of $3.8 billion to $4.0 billion. This revision aligns with the consensus revenue estimate of $4.04 billion for FY'24. The anticipated year-over-year decline in net sales in US dollars is now projected to be between 12% and 9%, an improvement from the previously expected range of 16% to 12%.

Actionable advice

1. Buy any meaningful dip

2. Buy incrementally - minimum of 3 to 5 buys

3. Embark on Call Writing to increase returns and Cash Covered Put Writing to initiate positions.