Logitech International (LOGI) is scheduled to announce its second-quarter fiscal 2024 results on October 23rd. As the company prepares to unveil its performance for the quarter, investors and traders are eagerly anticipating the release.
Analyzing the market consensus estimates, revenues for the second quarter are projected to be $978.4 million, a decrease of 14.8% compared to the same period last year. The expected non-GAAP earnings per share (EPS) stand at 66 cents, representing a significant decline of 21.4% year-over-year. These estimates have remained unchanged over the past 30 days.
Logitech has a track record of beating earnings estimates, with three out of the past four quarters surpassing the consensus expectations. The average surprise has been 15.1%. Now, let’s delve into the factors that have influenced Logitech’s performance leading up to this announcement.
Factors to Consider
Logitech’s fiscal second-quarter earnings may have been impacted by the weakened demand for personal computers (PCs), which are a key driver for its PC peripheral products. According to the latest Gartner report, worldwide PC shipments declined 9% year over year to 64.3 million units in the third quarter of 2023. This decline in PC sales may have negatively affected Logitech’s revenues.
While the company experienced robust demand for its Video Collaboration, PC Webcams, Keyboards & Combos, and Pointing Device tools in 2020 and 2021 due to the work-from-home trend, the current macroeconomic and geopolitical issues have led to a weakening global economy. Enterprises have postponed their large IT spending plans, resulting in decreased demand for PC peripheral products from organizations. Additionally, there may be a lack of product refreshes as most individuals refreshed their PCs and related peripherals around two years ago at the beginning of the pandemic.
Logitech’s second-quarter revenues are estimated to decline in several key categories. The estimated year-over-year decline in Video Collaboration, PC Webcams, Keyboards & Combos, Pointing Device, and Gaming revenues are 21.2%, 25.1%, 13.5%, 11.1%, and 19.6%, respectively. Declining consumer spending amid high inflation and interest rates may have further impacted the demand for Logitech’s Headsets, with an estimated decline of 10.6%. However, the revenues from the Tablet & Other Accessories business unit are expected to surge by 13.8% to $61.7 million.
Despite these challenges, Logitech’s cost-saving initiatives, including headcount reduction, may have partially offset the negative impacts on profitability.
What Our Model Says
Our model does not conclusively predict an earnings beat for LOGI this season. While Logitech currently carries a Zacks Rank #2, its Earnings ESP is 0.00%, suggesting that an earnings surprise might not be on the horizon.
Comparatively, other companies like Vertiv (VRT), Intel (INTC), and ON Semiconductor (ON) have a favorable combination of elements that could lead to an earnings beat in their upcoming releases.
Vertiv, with a Zacks Rank #2 and an Earnings ESP of +1.82%, is set to report its third-quarter 2023 results on October 25. Intel, also with a Zacks Rank #2 and an Earnings ESP of +12.98%, will release its third-quarter 2023 results on October 26. ON Semiconductor, carrying a Zacks Rank #2 and an Earnings ESP of +1.00%, is expected to announce its third-quarter 2022 results on October 30.
Conclusion
As Logitech prepares to release its second-quarter fiscal 2024 results, investors and traders are closely watching the outcome. Given the challenging market conditions and weakened demand for PC peripheral products, Logitech’s earnings and revenues may have been negatively impacted. However, the company’s cost-saving initiatives might have helped mitigate some of these challenges. Investors should keep an eye on the company’s performance while considering the broader economic factors affecting the tech industry.
