The computer hardware industry is dealing with the ramifications of a sell-off of technology stocks, which marked the end of its stellar rally over the past year. However, the continued adoption of a remote (and hybrid) working culture should allow the computer hardware industry to deliver solid revenues and earnings in the coming quarters. Furthermore, the ongoing 5G deployment is contributing significantly the rising demand for upgraded computer hardware that is compatible with the next-generation network.
The tech-sell off is expected to be short lived, providing investors perfect entry points in computer hardware stocks with solid growth potential.
As such, we think Logitech International S.A. (LOGI), NetApp, Inc. (NTAP), and Super Micro Computer, Inc. (SMCI) are expected to deliver solid returns in the coming months.
Logitech International S.A. (LOGI)
Founded in 1981 LOGI designs, manufactures and markets products that allow people to connect through music, gaming, video, computing and other digital platforms. It offers a range of gaming gears, including mice, keyboards, headsets, gamepads and steering wheels. Also, LOGI offers its products to a network of domestic and international customers including direct sales to retailers, e-tailers and indirect sales through distributors.
Last December, the company was named to the Dow Jones Sustainability Index (DJSI) Europe for the first time in recognition of its commitment to sustainable business practices. LOGI unveiled its lightest wireless esports gaming mouse—the Logitech G PRO X SUPERLIGHT in November .
To reduce its carbon impact, the company announced in November its commitment to incorporating post-consumer recycled plastic (PCR) into its products at scale. Also, in October Logitech G, one of its brands, announced a multi-year partnership with Riot Games, the creator of League of Legends game.
The company’s net sales have increased 84.7% year-over-year to $1.67 billion for the fiscal 2021 third quarter, ended December 31, 2020. Its non-GAAP gross profit has increased more than 122% year-over-year to $754.20 million. LOGI’s non-GAAP operating income was $476.26 million, which represents an improvement of more than 214% year-over-year. Its non-GAAP net income came in at $423.06 million, up 195.5% year-over-year. Also, its non-GAAP EPS increased 191.7% year-over-year to $2.45.
A consensus EPS estimate of $5.78 for its fiscal 2021 represents an improvement of 168.8% year-over-year. LOGI surpassed consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $4.86 billion for fiscal 2021 represents a 63.2% gain on a year-over-year basis. The stock has gained 173.4% over the past year and closed yesterday’s trading session at $100.76.
LOGI’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
The stock has an A grade for Quality and a B grade for Momentum. We have also rated LOGI for Growth, Value, Stability and Sentiment. Click here to access all LOGI’s ratings.
LOGI is ranked #21 of 48 stocks in the B-rated Technology - Hardware industry.
NetApp, Inc. (NTAP)
Based in Sunnyvale, California NTAP provides software, systems and services to manage and store customer data. The company’s portfolio of products and services satisfy a range of customer workloads across different data types and deployment models. Its data management and storage offerings help manage business productivity, performance and profitability, while providing investment protection and asset utilization. NTAP serves a wide range of industries including media, telecommunications and healthcare industry.
This month , NTAP announced the general availability of NetApp Astra, a fully managed application-aware data management service built for Kubernetes workloads. Also, the company entered a multi-year partnership with Aston Martin Cognizant Formula One on March 1, ahead of its return to the Formula One competition. And on in December, Photobox Group, a leading online photo printing company, selected NTAP’s Hybrid Cloud Infrastructure (HCI) solution to accelerate its infrastructure transformation and fulfil customer orders quickly for less cost.
The company’s net revenue has increased 4.7% year-over-year to $1.47 billion for the fiscal 2021 third quarter ended January 29, 2021. Its non-GAAP gross profit has increased 4.4% sequentially to $990 million. NTAP’s non-GAAP income from operations came in at $322 million, which represents an improvement of 10.7% sequentially. Also, its non-GAAP net income increased nearly 6% sequentially to $250 million and its non-GAAP EPS increased 4.8% sequentially to $1.10.
A consensus EPS estimate of $0.87 for the next quarter, ending July 31, 2021, represents an improvement of 19.2% year-over-year. Also, NTAP surpassed consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $1.50 billion for the current quarter, ending April 30, 2021, represents a 6.9% gain on a year-over-year basis. The stock has gained 68.6% over the past year and closed yesterday’s trading session at $68.80.
It’s no surprise that NTAP has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Quality and a B grade for Momentum. Click here to see the additional ratings for NTAP (Value, Stability, Growth and Sentiment).
Out of five stocks in the B-rated Technology - Storage industry, NTAP is ranked #2.
Super Micro Computer, Inc. (SMCI)
SMCI is engaged in developing and providing end-to-end green computing solutions for several markets, such as cloud computing, data center, enterprise information technology (IT), big data, high performance computing (HPC) and Internet of Things (IoT). The company’s solutions include server, storage, networking devices, server management software and technology support and services. Moreover, SMCI sells its products through direct sales force, distributors, value-added resellers, system integrators, and original equipment manufacturers (OEMs).
This month, SMCI announced the availability of the most complete server lineup supporting AMD EPYC 7003 Series Processors in the industry. The company released the details on an innovative new 2U 2-node multi-node GPU solution on February 23. It delivers up to 10% TCO savings utilizing shared power and cooling. SMCI also announced the early availability of its JumpStart for workload testing on 3rd-Gen Intel Xeon Scalable processor-based Supermicro X12 systems on February 18, 2021.
The company’s net sales have increased 8.9% sequentially to $830.31 million for the fiscal 2021 second quarter ended December 31, 2020. Its gross profit has increased 4.8% sequentially to $136.10 million. SMCI’s non-GAAP income from operations came in at $46.35 million, which represents an improvement of 26.9% year-over-year. Also, its non-GAAP net income came in at $34.68 million, up nearly 14% year-over-year while its non-GAAP EPS came in at $0.63, up 10.5% year-over-year.
A consensus EPS estimate of $0.80 for the next quarter, ending June 30, 2021, represents an improvement of 17.6% year-over-year. SMCI surpassed consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $820.82 million for the current quarter ending March 31, 2021 represents a 6.3% gain on a year-over-year basis. The stock has gained 61.9% over the past year and closed yesterday’s trading session at $37.10.
SMCI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating , which equates to Buy in our proprietary rating system.
The stock also has an A grade for Value and Sentiment and a B grade for Momentum. In addition to the POWR Ratings grades I’ve just highlighted, you can see SMCI’s ratings for Growth, Stability and Quality here.
SMCI is ranked #15 of 54 stocks in the B-rated Technology - Communication/Networking industry.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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LOGI shares were unchanged in after-hours trading Tuesday. Year-to-date, LOGI has gained 4.75%, versus a 5.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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