S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20

Logitech Is Still A Logical Choice For Dividend-Growth Portfolios 

Wednesday, October 27, 2021 | Thomas Hughes
Logitech Is Still A Logical Choice For Dividend-Growth Portfolios 

Logitech Invests In The Future 

Logitech (NASDAQ: LOGI) is one of the more appealing post-pandemic plays to us for many reasons. Not only is the company benefiting from COVID-related trends but it is also benefiting from strong secular trends, sustaining YOY growth in the face of double-digit comp, paying a very safe dividend, and investing in the future. Yes, the company is experiencing the same headwinds as everyone else but operations are still within target ranges and delivering strong cash flow and free cash flow. In our view, the recent pullback in prices is overblown and setting this company up for a rebound that could be worth upwards of 40% for investors. 

Logitech Slips On Mixed Results 

Logitech had a fantastic quarter despite the threat of rising costs, material shortfalls, and margin pressure. The only thing that can be said to be bad about the report, however, is the fact earnings and earnings alone missed the Marketbeat.com consensus estimates. On the top line, the $1.31 billion in consolidated revenue is up 4.0% over last year and last year the company grew 75%. On a two-year basis, the revenue is up more than 82% and shows no signs of abating. If we didn’t mention it before, Logitech manufactures and markets a wide range of peripheral devices for electronics like keyboards, mice, speakers, and headphones and those devices are still in high demand. 

On a segment basis, weakness in cams, tablet accessories, video, and headsets (which all saw high-double-digit growth last year) was offset by strength in keyboards, pointers, and gaming equipment. On a regional basis, sales in the U.S. were flat while EMEA grew 3% and APAC a more robust 12%. Moving down to the earnings portion of the report the details get a little dirty but there are some mitigating factors. The company’s AGM shrank by 370 basis points due to higher cost-of-goods sold including freight, materials and labor costs but remained with the company’s long-term target range. The operating income, both GAAP and adjusted, fell 40% but mostly due to a 60% increase in marketing and a 30% increase in R&D. We don’t like to see earnings miss but marketing and R&D are acceptable reasons because they should result in higher sales down the road. 

Looking forward, the company reaffirmed its guidance for revenue and earnings at the previously stated range. This is calling for full-year growth in the range of flat to +/- 5% which we view as a wide range given this year’s YTD strength. The comps are going to get tougher before they get easy again but the two strongest quarters of the fiscal year are still ahead. In our view, Logitech should produce at least flat to slightly higher YOY revenue if not growth in the mid-single-digit range. 

Logitech’s Dividend Is Safe 

Logitech pays a small but growing 1.12% yield and it is a very safe yield at that. The company reported negative cash flow for the quarter but that is due to ad-spend and R&D, not operational weakness, and the balance sheet is an absolute fortress. The company net-cash with very low leverage and ample coverage so we have no fear of a dividend cut or suspension and every reason to think there will be another dividend increase next year. Logitech pays out annually and only recently made the last distribution. 

The Technical Outlook: Logitech Is Ready To Rebound 

Shares of Logitech are down about 40% from the last high and look ready to rebound. The post-earnings price action has the market confirming support at a key level and moving higher in today’s action. Support and reversal are also indicated by the MACD and stochastic which are both showing clear divergence from the new low. Assuming price action is able to maintain its footing and regain the upper side of the short-term moving average we would expect to see the stock trend higher into the end of the year. If not, shares of Logitech may wallow near these low levels until another catalyst emerges. 

Logitech Is Still A Logical Choice For Dividend-Growth Portfolios 

Should you invest $1,000 in Logitech International right now?

Before you consider Logitech International, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Logitech International wasn't on the list.

While Logitech International currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Logitech International (LOGI)2.3$84.77+5.4%N/A15.61Hold$110.67
Compare These Stocks  Add These Stocks to My Watchlist 

Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.