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3 Reasons To Be Bullish On Logitech (LOGI) Prior To Earnings

Logitech International LOGI designs, manufactures, and markets innovative peripherals that provide people with easy access to the large digital world. The company’s product portfolio consists of internet video games, keyboards, audio products, interactive gaming devices and 3D controllers. Logitech will release its quarterly earnings report on Monday, July 24.

Logitech sports an impressive Zacks Rank #1 (Strong Buy) and has demolished its earnings projections in each of its past seventeen operational quarters by a whopping average of 157.7%. Also, the company operates within the Computer-Peripheral Equipment, which ranks in the top 33% of the Zacks Industry Rank.

Investors ought to feel a sense of confidence for the security when taking into account its consistency in beating earnings estimates, its strong Zacks Rank, and its positive Earnings ESP of 11.77%.

But if that’s not enough to convince you of the company’s strength, here are three additional reasons to be optimistic on Logitech ahead of earnings:

1.       Constant Pursuit of Innovation

Logitech is intending to tap into the high potential market for accessories by expanding its product portfolio. The company has manufactured innovative options, such as the fastest performing mouse and keyboard switches, as well as a  wireless mouse with the longest battery life.

Logitech has introduced numerous offerings recently, including the Pro Gaming mouse; a new version of Boom and Megaboom products, Ultimate Ears Wonderboom; and the SmartDock. The company’s Audio-PC & Wearables business has also benefited from the addition of the Jaybird family of wireless earbuds to its product lines. A diverse product roster and excellent demand allows for Logitech to be highly confident on its future financial outlook.

2.       Commitment to Shareholders

Logitech continues to to reward its shareholders through dividend hikes and share repurchases. In fiscal 2016, the company returned $156 million to shareholders, with $70 million in the form of share buybacks and $86 million in dividends.

During the current fiscal year, Logitech has returned $177 million in the form of $84 million of stock repurchases and $93 million in dividends so far. Over the next three years, the company is expected to return close to $500 million to its shareholders in dividends and share buybacks. Additionally, the company planned to pay $250 million to shareholders in dividends between the fiscal years of 2015 and 2017. These initiatives could very well increase shareholders’ optimism in the security.

3.       Strong Growth Prospects

Logitech continues to expand and differentiate its products, which enhances its growth prospects. The company holds an impressive current cash flow growth of 22.94% in comparison to the industry average of 4.66%. Furthermore, Logitech possesses a RoE of 21.91% and net margin of 8.68%, both of which tower over the industry averages of 5.01% and 1.36%, respectively. Also, Logitech is expected to earn $521.24 million in revenue this quarter, which would constitute 8.62% year-over-year growth—not bad for a company of its size.

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