Zebra Technologies (ZBRA) Margin Compression To 7.8% Reinforces Bearish Profitability Narratives

Zebra Technologies (ZBRA) has wrapped up FY 2025 with fourth quarter revenue of US$1,475 million and basic EPS of US$1.39. Trailing 12 month figures show total revenue of US$5.4 billion and basic EPS of US$8.24. Over the past six reported quarters, revenue has ranged from US$1,255 million to US$1,475 million and quarterly basic EPS has moved between US$1.39 and US$3.16. This gives investors a clear view of how sales and per share earnings have tracked alongside a trailing net margin that has compressed from 10.6% to 7.8%. This keeps the focus firmly on profitability quality and where margins head next.

See our full analysis for Zebra Technologies.

With the latest earnings now on the table, the next step is to see how these numbers line up against the widely held narratives around Zebra, where some storylines may get support and others could be challenged by the data.

See what the community is saying about Zebra Technologies

Net Margin Slips To 7.8% On Lower TTM Earnings

• Over the last twelve months, Zebra generated US$5.4b in revenue and US$419 million in net income, which works out to a 7.8% net margin compared with 10.6% a year earlier.
• Critics highlight this margin compression as a risk, and the bearish view leans on it, yet the quarterly pattern shows revenue between US$1,255 million and US$1,475 million while net income moved from US$163 million in Q4 2024 to US$70 million in Q4 2025, which
  • supports the bearish concern that profitability has been under pressure, with trailing five year earnings described as having declined 11.6% per year, even though sales have stayed in a fairly tight range, and
  • fits with the risk flag that profitability has weakened, as the lower TTM net income of US$419 million versus US$528 million a year earlier comes alongside that margin step down from 10.6% to 7.8%.

Bears argue that this mix of lower net income and thinner margins could keep pressure on how the market prices Zebra’s hardware heavy model. 🐻 Zebra Technologies Bear Case

Valuation Gap Versus TTM Fundamentals

• At a current share price of US$264.62, Zebra is described as trading below a DCF fair value of about US$426.59 and below an analyst price target of US$338.43, while its P/E of 31.1x sits above the broader US Electronic industry average of 27.1x but below a 53.6x peer group average.
• What is interesting for the bullish side is that these valuation references point to upside even though trailing earnings have softened, which
  • supports the bullish claim that the stock price does not fully reflect the higher earnings levels analysts are modeling, given the reported 38% discount to the DCF fair value, and
  • creates some tension with the idea of simple multiple compression because, despite five year earnings declining 11.6% per year and the net margin sitting at 7.8%, the P/E is still below that 53.6x peer average while analysts are expecting earnings to grow 18.6% per year.

Bulls argue that if those higher earnings forecasts play out, the current discount to both DCF fair value and the US$338.43 analyst target could prove important. 🐂 Zebra Technologies Bull Case

Forecast Growth Outpaces Recent Earnings Trend

• Forward looking figures in the dataset show revenue growth modeled at 6.5% per year and earnings growth at 18.6% per year, compared with trailing five year earnings that declined 11.6% per year and the latest trailing twelve month EPS of US$8.24.
• Consensus narrative points to automation and recurring software as long term drivers, and these forecasts line up with that, but with some friction, as
  • the 6.5% revenue growth forecast sits below the 10.3% US market forecast, which challenges the idea that Zebra will automatically outgrow the wider market even as demand for automation and tracking is highlighted as a key theme, and
  • the expected 18.6% earnings growth contrasts with the weaker trailing metrics, so investors weighing this balanced view may focus on whether the shift toward more software, services and acquisitions like Elo and Photoneo can support margins closer to the higher levels analysts are assuming.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Zebra Technologies on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Zebra Technologies research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

With net margin compressed to 7.8%, trailing earnings described as declining and profitability under pressure, Zebra does not currently fit a strong earnings quality profile.

If that mix of thinner margins and softer earnings has you looking for companies with more compelling valuations, our 53 high quality undervalued stocks can quickly surface ideas that better match what you are aiming for today.

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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