- Wondering whether Zebra Technologies is attractively priced after a tough run, or if the risks still outweigh the potential reward? This article is aimed at helping you size up the value story in a clear, practical way.
- The stock last closed at US$213.67, with returns of 7.7% decline over the past week, 17.1% decline over the past month, 13.9% decline year to date, 23.5% decline over one year, 25.7% decline over three years and 54.9% decline over five years. These moves are likely to catch the eye of investors looking at both risk and possible recovery scenarios.
- Recent coverage has focused on Zebra Technologies as a key player in data capture and enterprise asset intelligence. This helps explain why sentiment can shift quickly when expectations around demand or capital spending change. Evergreen interest in the company, including this update, often centres on whether current pricing reflects the quality of its technology exposure or overstates concerns that have built up over time.
- Right now, Zebra Technologies scores 6 out of 6 on our value checks, giving it a valuation score of 6. Next, we will look at how different valuation methods arrive at this result and why there may be an even better way to think about value by the end of the article.
Find out why Zebra Technologies's -23.5% return over the last year is lagging behind its peers.
Approach 1: Zebra Technologies Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and then discounting them back to today to reflect risk and the time value of money.
For Zebra Technologies, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is about $833.3 million. Analyst and extrapolated projections supplied to the model run through to 2035, with free cash flow in 2030 assumed at $1,291 million, or roughly $1.3b. Simply Wall St uses analyst inputs where available for the earlier years, then extrapolates further out using its own growth assumptions.
Bringing all of those projected cash flows back to today results in an estimated intrinsic value of about $418.29 per share. Compared with the recent share price of US$213.67, the DCF indicates a 48.9% discount, which means the shares screen as undervalued on this model alone.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Zebra Technologies is undervalued by 48.9%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks.
Approach 2: Zebra Technologies Price vs Earnings
For profitable companies like Zebra Technologies, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings. It links directly to what the business is actually generating today, which many investors find easier to relate to than long range cash flow forecasts.
What counts as a "fair" P/E usually reflects two big levers: how the market views a company’s growth potential, and how much risk investors see in those earnings. Higher growth and lower perceived risk often support a higher P/E, while slower growth or higher uncertainty can justify a lower one.
Zebra Technologies currently trades on a P/E of 25.1x, compared with an Electronic industry average of about 27.6x and a peer group average of 87.5x. Simply Wall St’s Fair Ratio for Zebra is 30.8x, which is its proprietary view of what the P/E could be given factors such as earnings growth, margins, size, industry and company specific risks. This Fair Ratio can be more informative than a simple peer or industry comparison, because it aligns the multiple with Zebra’s own characteristics rather than assuming that all companies deserve similar pricing. On this basis, the current P/E is below the Fair Ratio, suggesting the shares screen as undervalued on this metric.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your Zebra Technologies Narrative
Earlier we mentioned that there is an even better way to understand valuation. Narratives let you turn your view of Zebra Technologies into a clear story that links assumptions about future revenue, earnings, margins and risk to a financial forecast and a Fair Value, then compares that Fair Value with today’s price to help you assess whether the gap is large enough to consider buying or selling.
On Simply Wall St’s Community page, Narratives are available as an easy to use tool that updates automatically when new information such as earnings releases, news or guidance is added. This helps keep your story and Fair Value aligned with the latest data.
For Zebra Technologies, one investor might build a bullish Narrative closer to the higher analyst targets around US$410, with assumptions that revenue grows faster and margins are higher. Another might choose a more cautious Narrative nearer the lower targets around US$263, with slower assumed growth and lower valuation multiples. Seeing those side by side can help you decide which story feels more realistic for your own portfolio and risk tolerance.
Do you think there's more to the story for Zebra Technologies? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com