Investment Thesis
Zebra Technologies demonstrates solid cash flow generation and manageable leverage, but faces significant operational headwinds with net income declining 20.6% despite 8.3% revenue growth, indicating margin compression or underlying operational challenges. Weak return metrics (ROE 3.9%, ROA 1.6%) and deteriorating liquidity ratios signal capital efficiency concerns and potential near-term cash constraints despite strong debt servicing capacity.
Strengths
- Strong free cash flow of $163M with 10.9% FCF margin demonstrates underlying business cash generation capability
- Excellent interest coverage ratio of 43.0x provides substantial debt service cushion and financial flexibility
- Solid gross margin of 49.6% and moderate debt-to-equity ratio of 0.77x indicate reasonable operational profitability and balanced capital structure
Risks
- Severe earnings deterioration with net income down 20.6% and EPS down 19.6% YoY despite revenue growth signals margin compression or one-time charges requiring explanation
- Liquidity metrics below acceptable thresholds with current ratio of 0.96x and quick ratio of 0.57x indicate potential short-term cash constraints
- Weak return on equity (3.9%) and return on assets (1.6%) suggest inefficient capital deployment across the $8.3B asset base
Key Metrics to Watch
- Operating margin trend and root causes of earnings decline relative to revenue growth
- Current and quick ratios movement and cash position adequacy
- Return on equity and asset efficiency metrics to assess capital deployment effectiveness
Financial Metrics
Revenue
1.5B
Net Income
135.0M
EPS (Diluted)
$2.72
Free Cash Flow
163.0M
Total Assets
8.3B
Cash
114.0M
Profitability Ratios
Gross Margin
49.6%
Operating Margin
14.4%
Net Margin
9.0%
ROE
3.9%
ROA
1.6%
FCF Margin
10.9%
Balance Sheet & Liquidity
Current Ratio
0.96x
Quick Ratio
0.57x
Debt/Equity
0.77x
Debt/Assets
58.4%
Interest Coverage
43.00x
Long-term Debt
2.7B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-14T09:32:09.103897 |
Data as of: 2026-04-04 |
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