Why Is Zebra (ZBRA) Down 4.9% Since Last Earnings Report?

It has been about a month since the last earnings report for Zebra Technologies (ZBRA). Shares have lost about 4.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Zebra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Zebra Technologies Q2 Earnings Beat Estimates on Sales Growth, Outlook Raised

Zebra Technologies reported second-quarter 2026 adjusted earnings of $6.35 per share, which beat the Zacks Consensus Estimate of $4.35 by 46%. The bottom line increased 75.9% from $3.61 per share reported in the year-ago quarter.

Total revenues of $1.56 billion surpassed the consensus estimate of $1.50 billion by 3.9%. The top line increased 20.4% year over year, supported by broad-based growth across segments and regions. Consolidated organic net sales increased 9.2% year over year. Acquisitions contributed 8.7% to reported sales growth, while favorable foreign currency translation contributed 2.5%.

Segmental Performance

Effective from the fourth quarter of 2025, the company started reporting under two segments, namely Connected Frontline and Asset Visibility & Automation.

Revenues from the Connected Frontline segment rose 25.9% year over year to $903 million. Organic net sales increased 7.5%. The Zacks Consensus Estimate was pegged at $839 million.

The Asset Visibility & Automation segment’s revenues totaled $654 million, up 13.5% year over year. Organic net sales increased 11.4%. The Zacks Consensus Estimate was pegged at $662 million.

Margin Profile

In the second quarter of 2026, Zebra Technologies’ cost of sales totaled $732 million, up 8.1% year over year. Total operating expenses increased 16.4% year over year to $504 million.

The company reported net income of $233 million compared with $112 million in the year-ago quarter. Adjusted net income increased to $305 million from $186 million reported in the prior-year quarter.

Zebra Technologies’ Balance Sheet and Cash Flow

Zebra Technologies had cash and cash equivalents of $157 million at the end of the second quarter of 2026. Total debt amounted to $2.78 billion, while the net debt-to-adjusted EBITDA ratio was 1.9. 

In the first six months of 2026, Zebra Technologies generated net cash of $387 million from operating activities compared with $325 million in the year-ago period. The company incurred capital expenditures of $26 million in the same time frame. Free cash flow amounted to $361 million compared with $288 million in the prior-year period.

Guidance

For the third quarter of 2026, Zebra Technologies expects net sales growth in the band of 17-20% year over year. The guidance includes an approximately 10.5-percentage-point favorable impact from acquisitions and foreign currency.

Adjusted EBITDA margin is anticipated to be approximately 22% in the third quarter. Adjusted earnings per share are expected to be in the band of $4.70-$4.90.

For 2026, it raised its financial outlook. The company now expects adjusted earnings to be $20.75-$21.25 per share. Adjusted EBITDA margin is anticipated to be in the band of 23.5-24.0% for the year. The company currently expects net sales growth of 14-16% year over year. It expects free cash flow to be at least $1 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 10.65% due to these changes.

VGM Scores

Currently, Zebra has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Zebra has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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