Zebra has gotten torched over the last six months - since August 2025, its stock price has dropped 27.4% to $232.00 per share. This might have investors contemplating their next move.
Is there a buying opportunity in Zebra, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is Zebra Not Exciting?
Even with the cheaper entry price, we're cautious about Zebra. Here are three reasons you should be careful with ZBRA and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Zebra’s sales grew at a tepid 3.9% compounded annual growth rate over the last five years. This was below our standard for the business services sector.
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Zebra’s unimpressive 4.3% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Zebra’s ROIC decreased by 4.7 percentage points annually each year over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
Zebra’s business quality ultimately falls short of our standards. Following the recent decline, the stock trades at 14.2× forward P/E (or $232.00 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at an all-weather company that owns household favorite Taco Bell.
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