How the Latest Logistics Partnership Could Impact Zebra Technologies' True Value

• Ever wonder if Zebra Technologies is undervalued or overpriced in today’s market? Let’s break down what’s really behind the numbers and see if there’s value hiding in plain sight.
• Zebra’s stock has been on a wild ride recently, popping 8.0% this week but still down by 19.3% over the last month and 35.0% year-to-date.
• Several big headlines have moved the stock lately, including a major partnership with a global logistics provider and increased investor focus on supply chain technology. These developments have put the spotlight back on Zebra’s long-term potential and the risks that might come with rapid tech adoption.
• According to our valuation checks, Zebra scores 5 out of 6 for being undervalued, suggesting room for optimism. Next, we’ll explore the valuation methods you should know. Stick around for the best way to get a true sense of the company’s worth.

Find out why Zebra Technologies's -38.1% return over the last year is lagging behind its peers.

Approach 1: Zebra Technologies Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is worth today based on its expected future cash flows, which are projected forward and then discounted back to present value. This method offers a way to look deeper than just earnings multiples or peer comparisons by focusing on how much actual cash Zebra Technologies can generate for shareholders over time.

Currently, Zebra Technologies reports Free Cash Flow of $786.8 million, with analysts projecting steady growth in the years ahead. For example, cash flow is expected to reach $1,059 million by 2029. Analysts provide detailed projections for the first several years, and beyond that, Simply Wall St extends the forecasts through 2035 using a consistent long-term growth rate model. All figures are calculated in USD, matching the company's listing currency.

Based on these projections, the DCF model estimates Zebra Technologies' intrinsic value at $343.49 per share. This suggests the stock is trading at a 27.4% discount compared to its calculated fair value, indicating it currently looks undervalued in the market.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Zebra Technologies is undervalued by 27.4%. Track this in your watchlist or portfolio, or discover 924 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Zebra Technologies.

Approach 2: Zebra Technologies Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way of valuing profitable companies like Zebra Technologies because it highlights how much investors are willing to pay for each dollar of today's earnings. A lower PE ratio can suggest a company is undervalued, as long as earnings are stable and expected to grow, while a higher ratio can signal higher growth expectations or increased risk.

Growth potential and risk both play a big role in setting a “normal” PE. Companies expected to deliver strong, consistent earnings growth often trade at higher PEs, while those facing uncertainty or declining profits might command lower multiples. Industry norms also matter since investors typically use the sector’s average as a baseline.

Zebra Technologies currently trades at 24.7x earnings, which is almost identical to the Electronic industry average of 24.6x. It is trading at about half the average of its listed peers at 48.2x. However, Simply Wall St's proprietary "Fair Ratio" for Zebra, which is 32.1x, gives a clearer benchmark. Unlike peer or industry comparisons, the Fair Ratio is tailored to each company by weighing earnings growth, industry position, profitability, company size, and specific risks, providing a smarter reference for valuation.

Comparing Zebra’s PE of 24.7x to its Fair Ratio of 32.1x suggests the stock is currently undervalued against what would be expected for its underlying characteristics.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1435 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Zebra Technologies Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is essentially your unique perspective or story about a company, where you tie together what you believe about Zebra Technologies, such as future revenue, earnings, and margins, with what you think is a fair value for its stock.

Narratives link the company’s story to a financial forecast and then to a fair value, allowing you to move beyond generic ratios and really connect the numbers with your view of the underlying business. They are quick and accessible, and you can easily create or follow Narratives within Simply Wall St’s Community page, which is trusted by millions of investors worldwide.

Using Narratives, you can make smarter buy and sell decisions by comparing your Fair Value (based on your assumptions) to the current Price, getting a real sense of whether the stock looks like a bargain or is potentially overvalued, all in real time. Because Narratives are updated dynamically with the latest news or earnings, your story automatically adapts as fresh information becomes available.

For example, among Zebra Technologies Narratives, the most optimistic investor sees margins expanding and a price target near $421, while the most cautious expects a target around $300. This demonstrates how different perspectives and assumptions lead to different valuations and investment decisions.

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.

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