Warehouse inventory-management specialist Zebra Technologies (ZBRA -1.96%) reported a strong quarter and suggested the momentum can build from here. Investors were excited, sending shares of Zebra up as much as 11% on Tuesday morning and up 6% as of 11 a.m. ET.
Improved profitability fuels earnings beat
Zebra makes scanners, barcode technology, and other products that help automate tasks for front-line and warehouse workers. The company earned $3.18 per share in the quarter on revenue of $1.22 billion, topping Wall Street's forecast of $2.80 per share on sales of $1.18 billion.
Zebra raised its gross margin by 50 basis points to 48.4% despite flat sales year over year, thanks to its efforts to cut costs and exit lower-margin businesses. The company said it was on track for $120 million in annualized cost cuts.
CEO Bill Burns said in a statement:
Our teams executed well during the quarter, enabling us to deliver sales and earnings results above the high end of our guidance ranges. We returned to growth in enterprise mobile computing across all our vertical end markets and delivered another quarter of sequential improvement in profitability as a result of our continued cost discipline and improved gross margin.
Is Zebra stock a buy?
Zebra says it sees full-year adjusted earnings coming in at between $12.30 and $12.90 per share, significantly above Wall Street's $11.92 per-share consensus estimate. In a period where corporate customers are trying to do more with less, there appears to be momentum behind warehouse automation and other efficiency schemes powered by Zebra.
Even with Tuesday's jump, Zebra shares are still trading about 40% below where they were a few years ago. It might be hard to retrace those highs any time soon, but with strong demand and improving efficiency, Zebra can gallop higher from here.
