What happened
Shares of mobile printing and data company Zebra Technologies (ZBRA -1.96%) fell 19% in February, according to data provided by S&P Global Market Intelligence. The company posted an excellent earnings report but is expecting a deceleration in sales growth.
So what
Zebra makes mobile computing systems for data collection, printing, and connecting. It's known for its barcode scanners in retail and warehousing, mobile printing and scanning systems, and radio frequency identification (RFID) technology. It also has uses in healthcare, banking, and many other sectors.
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Fourth-quarter revenue increased 12% year over year to nearly $1.5 billion. Net income, however, decreased slightly due to increased costs and supply-chain issues. Zebra invested in higher-cost supply solutions where possible, such as air freight, and has a large base of suppliers in different locations that kept it chugging along and coming through for its customers.
The company wasn't able to meet all of its strong demand due to chip shortages and other backups, yet it still managed to increase sales by double digits and has a robust pipeline of unmet demand going into 2022. However, with continued logjams, it's only guiding for 1% to 3% year-over-year revenue growth for the 2022 first quarter and 3% to 7% for the year.
2021 was a great year for the company, which posted a 26% increase in revenue over 2020 for the full year and a 2% increase in earnings per share (EPS) to $4.54.
Now what
Zebra has been a great stock to own over time. It increased more than 300% over the past five years, easily beating the S&P 500's 80% gain over the same period. It's a perennial winner, leading its industry with its cutting-edge technology and real-world utility.
Yet shares trade at only 25 times trailing-12-month earnings, making it cheap to buy. The price decrease might be partly due to general stock market volatility and partly due to uncertainty in how the company will progress in the face of continued supply challenges. But this is temporary.
Zebra has core customers in many sectors that give it an easy and growing recurring revenue stream and a long growth runway. Investors can see any price decline as an opportunity to buy on the dip.
