Investors in electronics and accessories manufacturer Logitech (NASDAQ:LOGI) are undoubtedly smiling and enjoying their outstanding returns in 2020. The multi-month move in Logitech stock can best be described as parabolic, though explosive would also fit.
With that going on, it would make sense that traders and social-media commentators should be absolutely buzzing about LOGI stock. Yet somehow, this stock isn’t viewed as a hot item.
One might even get the impression that Logitech is widely viewed as a second-tier company. That’s unfortunate as Logitech offers no shortage of value to its shareholders. Besides, momentum-focused traders should be jubilant about the stock’s price action.
Perhaps today we can send the call out and bring more traders into the fold. There’s a hidden gem here, if only more people would recognize it.
A Closer Look at Logitech Stock
We know in hindsight that technology sector stocks generally rebounded strongly from the crash induced by the novel coronavirus. Logitech stock is truly a perfect example of tech’s incredible comeback story.
Make no mistake about it: the coronavirus crash was scary at the time. At its absolute lowest point, Logitech bottomed out at $31.37. That’s a sizable drawdown for a stock that had been quite comfortable above the $40 level for a while.
However, after the rain came the sunshine. A full-on rally ensued with hardly a hiccup. By early August, Logitech stock was trading at a mighty $73 and change.
Is this monumental bull run justified, or should value-oriented investors be concerned? When we examine Logitech on a fundamental level, all worries should be put to rest.
An Earnings Crusher
Not long ago, Logitech released its first-quarter fiscal-year 2021 earnings figures. Suffice it to say that the company crushed it like a discarded soda can.
The bullet-pointed highlights should speak for themselves:
- $792 million in sales, up 23% year-over-year (YoY)
- $83 million in GAAP operating income, up 76% YoY
- GAAP earnings per share at 42 cents, up 56% YoY
- $117 million in non-GAAP operating income, up 75% YoY
- Non-GAAP earnings per share of 64 cents, up 64% YoY
- Cash flow from operations totaling $119 million, a vast improvement over the $37 million recorded during the comparable quarter of the prior year
No matter how you look at it, this was an unassailable quarterly performance for Logitech. And, it took place during a global pandemic.
How can we account for these outstanding quarterly financials? Logitech President and CEO Bracken Darrell emphasizes the company’s ability to adapt during the pandemic:
“Our company strategy focuses on four long-term trends: more of us will work from home; video calls will replace audio calls; esports will become as big as conventional sports; and billions of people worldwide will create content, not just a handful of TV and movie studios.”
With that, Darrell stressed that Logitech was already well-positioned to capitalize on those trends. As the trends accelerated, Logitech was able to adjust accordingly and thereby remain relevant to its clientele.
Buyback Bonanza
While it’s not necessarily a permanent solution, share repurchases can often help companies keep their stock prices up. It’s a practice that’s commonly accepted and is likely here to stay.
Logitech is certainly no stranger to stock-share buybacks. Thus, the company recently revealed its new share-buyback program.
This program is scheduled to last for three years and requires approval from the Swiss Takeover Board. Upon such approval, up to $250 million worth of stock-share buybacks will be authorized.
Investors don’t need to consider this, by itself, as a reason to own the shares. Rather, it’s another contributing factor that’s likely to buoy the Logitech stock price going forward.
The Bottom Line on Logitech Stock
Logitech’s earnings blowout might persuade some traders to take the company more seriously. The company’s buyback program adds even more weight to the bull case for Logitech stock.
Don’t be surprised, then, if the stock price continues to accelerate upward and someday, sooner or later, Logitech gets the attention it deserves.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
