Zebra has gotten torched over the last six months - since November 2024, its stock price has dropped 24.8% to $301 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy Zebra, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think Zebra Will Underperform?
Despite the more favorable entry price, we're swiping left on Zebra for now. Here are three reasons why you should be careful with ZBRA and a stock we'd rather own.
1. Core Business Falling Behind as Demand Declines
Investors interested in Specialized Technology companies should track organic revenue in addition to reported revenue. This metric gives visibility into Zebra’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Zebra’s organic revenue averaged 2.7% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Zebra might have to lean into acquisitions to grow, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus). 
2. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Zebra’s weak 3% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Zebra’s ROIC has decreased significantly over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of Zebra, we’ll be cheering from the sidelines. Following the recent decline, the stock trades at 19.4× forward P/E (or $301 per share). This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere. Let us point you toward one of our top digital advertising picks.
Stocks We Like More Than Zebra
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