Logitech (LOGI) is enjoying a strong start to fiscal 2015. The company posted impressive results in the first quarter, exceeding expectations. The company came up with impressive results on the back of strong retail sales growth. Management is confident of delivering better results in the future as Logitech is well-positioned financially, which is evident from its robust sales growth for the fifth consecutive quarter. It is adopting several strategies and bringing in new products to hold a unique image among the customers. With the future looking bright, there is lot more in Logitech. Let us find out what more the company has to offer to investors.
Results and beyond
In the recently reported quarter, Logitech posted a 1% increase in sales to $484 million. it led the company to see good improvement in the non-GAAP net income. Logitech posted Non-GAAP net income of $44 million. Logitech also saw noticeable growth in the EPS. The company posted EPS of $0.23, which is better than $0.07 per share as compared to a year ago.
Logitech entered the new fiscal year in great fashion. The stock had been impressive due to the consistent sales growth over the period. Logitech kept its commitments and again posted considerable growth in sales for the fifth consecutive quarter. The company is seeing robust growth in its core categories such as PC gaming, tablets, mobile speakers, and other accessories. Following the terrific results, Logitech posted an upbeat outlook which helped it to further gain traction on the stock market.
Innovation in focus
Logitech is focusing on innovations and adding new products to strengthen its product portfolio. It is exploring other venues to seek profitability. It has recently announced that it is bringing in four new products home automation product compatibility. This will polish its leadership in universal remotes.
One of these new products is the New Harmony. This is rapidly gaining recognition due to its special features. It gives the customer an easy access and control over a wide library of entertainment and home automation devices, all from one centralized control system. With Harmony, Logitech is focusing on simplifying home entertainment.
Moving on to its core business, Logitech is also making new additions in its PC gaming segment. According to its latest announcements, Logitech has recently brought in a new gaming keyboard: Logitech G910 Orion Spark RGB Mechanical Keyboard. It is claiming to have launched most advanced mechanical gaming keyboard in the world.
What attracts customers is that it comes loaded with exclusive new Romer-G™ mechanical switches, offering 25% faster actuation than any other mechanical switch. It also has improved durability and intelligent illumination. This keyboard is expected to gain more traction in the market and even the management had stated that the gamers like the new switches that Logitech introduced with its new keyboard.
Tablet focus
Logitech is also focusing on the tablet accessory market with a new Samsung offering. It has also introduced Logitech type-S, which is a protective keyboard case for the Samsung Galaxy Tab S.
Logitech is also seeing good opportunities in the video collaboration. Its product portfolio for this is strong. It is seeing good demands for high quality audio and video. With such a demand, Logitech is expecting an increase in the shipment of its offerings for the low price, high quality video collaboration solutions in fiscal 2015.
Conclusion
Moving to the fundamentals, Logitech is reasonable with a trailing P/E of 27.72. But the forward P/E of 12.62 shows slow, yet steady earnings growth. The profit margin is also satisfactory with 4.53%. But for the next five years, the earnings are declining at a CAGR of -3.2% which is an indication that its long-term prospects are not strong. But the company is gaining good market share on the back of its innovations and new products in the market. Considering the facts and ratios, investors seeking short term gains should definitely include Logitech in their portfolio, as it stock looks perfectly in shape for the near future.
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