ZBRA

We rate ZEBRA TECHNOLOGIES CORP (ZBRA) as a Hold with a composite score of 52.6/100 at a current price of $235.91. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (67th percentile) and quality (64th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (29th percentile) and investment (47th percentile) tempers our overall conviction. We assign a Narrow Moat rating (62/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ZEBRA TECHNOLOGIES CORP holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 52.6/100 places it at rank #1586 in our full 7,333-stock universe. With a $15.2B market capitalization, ZEBRA TECHNOLOGIES CORP operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 8%, though momentum at the 29th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 48% (+6.0pp vs sector) narrow to operating margins of 15% (+13.2pp vs sector) and net margins of 9.4%, yielding a gross-to-net conversion rate of 19%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $235.91, ZEBRA TECHNOLOGIES CORP is trading near fair value based on current fundamentals. Our value factor score of 67/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 25.9x (roughly in line with the sector median of 22.3x), EV/EBITDA of 13.6x (near the sector median), P/B of 3.5x, P/S of 2.4x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to ZEBRA TECHNOLOGIES CORP. Key risk factors include elevated market sensitivity (beta of 1.69), significant leverage (137% debt-to-equity). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.69); significant leverage (137% debt-to-equity). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 57th percentile and quality factor at the 64th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 48% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate ZEBRA TECHNOLOGIES CORP's capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — ZEBRA TECHNOLOGIES CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, ZEBRA TECHNOLOGIES CORP receives a Hold rating with a composite score of 52.6/100 (rank #1586 of 7,333). Our quantitative framework assigns a Narrow Moat (62/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 52/100.

Our analysis supports a neutral stance on ZEBRA TECHNOLOGIES CORP. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.