Logitech (LOGI) Down 7.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Logitech (LOGI). Shares have lost about 7.2% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Logitech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Logitech Q2 Earnings and Revenues Surpass EstimatesLogitech reported second-quarter fiscal 2025 non-GAAP earnings of $1.20 per share, which beat the Zacks Consensus Estimate of $1.1 and increased 10% year over year. The company’s bottom-line results benefited from increased revenues and lower product costs, slightly offset by rising promotional spending leading to gross margin expansion.Logitech’s second-quarter revenues of $1.12 billion outpaced the consensus mark of $1.09 billion. Moreover, the top line marked a year-over-year increase of 6% on a reported basis and 6% on a constant-currency basis, driven by higher demand across key product categories and efficient inventory management.Logitech’s Segment DetailsLogitech registered sales growth across the majority of key product categories year over year. In the first quarter of fiscal 2024, LOGI reclassified its product segments by removing the Audio & Wearable and Mobile Speakers categories and adding Headsets and Other categories.Revenues from Keyboards & Combos improved 8% year over year to $210 million. Gaming revenues increased 7% year over year to $300.5 million. Our model estimates for Keyboards & Combos and Gaming revenues were pegged at $207.3 million and $294.6 million, respectively.Revenues from the Headsets product category jumped 6% to $46.9 million, Pointing Devices grew 2% to $196 million, Tablet Accessories increased 34% to $85.6 million and Video Collaboration increased 5% to $159.7 million. Our model estimates for Headsets, Pointing Devices, Tablet Accessories and Video Collaboration were pegged at $44.9 million, $192.7 million, $66.7 million and $153 million, respectively.On the other hand, Webcams declined 9% to $80.2 million and the Other category’s revenues fell 6% to $37.3 million. Our estimates for Logitech’s Webcams and Other category’s first-quarter revenues were pegged at $83.4 million and $34.8 million, respectively.Logitech’s Margins & Operating MetricsThe non-GAAP gross profit jumped 11% to $492.4 million from $444 million reported in the year-ago quarter. The non-GAAP gross margin expanded 210 basis points (bps) from the prior-year quarter to 44.1%.Non-GAAP operating expenses increased 15% to $299.7 million. As a percentage of revenues, non-GAAP operating expenses increased 220 bps to 26.9%.The non-GAAP operating income grew 5.2% to $192.8 million from $183.2 million reported in the year-ago quarter. The operating margin remained flat at 17.3% year over year. The increase in the operating margin was due to lower inventory reserves due to improved demand, partially offset by higher promotional spending.Logitech’s Liquidity and Shareholder ReturnAs of Sept. 30, 2024, LOGI’s cash and cash equivalents were $1.36 billion, down from $1.53 billion recorded in the previous quarter. Additionally, the company generated $166 million in cash from operational activities in the second quarter of fiscal 2025.In the fiscal second quarter, the company returned $340 million of cash to shareholders through share repurchases and dividends. In the second quarter of 2025, LOGI repurchased shares worth $132 million.Logitech Lifts Fiscal 2025 GuidanceBuoyed by stronger-than-expected second-quarter performance, Logitech raised its guidance for fiscal 2025. It now expects fiscal 2025 sales in the band of $4.39-$4.47 billion, up from the previous guidance of $4.34-$4.43 billion. The revised top-line projection reflects a year-over-year increase in the band of 2-4%, up from the earlier range of 1-3%.Logitech also revised its projections of non-GAAP operating profit to $720-$750 million, up from the previous guidance of $700-$730 million. The updated guidance for operating income projects year-over-year growth of 3-7%, up from the previous guidance of a growth of 0-4%.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in estimates review.VGM ScoresCurrently, Logitech has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Logitech International S.A. (LOGI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks