Monday, June 2, 2014

Logitech International is Now Over the Hump (LOGI)

To say the past twelve months have been tough ones for Logitech International SA (NASDAQ:LOGI) might be an understatement. Shares have fallen from a high of $10.29 last September to a low of $6.24 in April of this year. Though LOGI hasn't traded lower than that since then, it's not like the stock's suggested it wants to stage a major recovery... unless maybe you look really, really close. Well, I did.

If the name rings a bell, it may be because you've got some Logitech International SA equipment attached to the device you're using right now. The company makes computer peripherals - speakers, keyboards, cameras, etc. Their stuff is among the best in the industry. That's not why I'm rapidly becoming a fan of LOGI, however. In fact, the organization has failed to turn a profit over the past four quarters (on a net basis). I'm rapidly becoming a fan because the chart says the worst of the company's sales and earnings struggles are behind it.

How's that? In simplest terms, LOGI has now made a higher high following a higher low. It's the first time it's happened in over a year.

Don't discount the importance of that detail, and its technical ramifications. Logitech International SA has been working on this rebound for months, slowly logging an arc-shaped reversal (the kind that sticks) since late March. As of this week, however, that turnaround effort finally finds the undertow working in its favor.

Analysts foresee numbers that jive with the stock's recovery. After Logitech International lost a total of $175 million over the past twelve months on $2.11 billion in sales, these pros are looking for a per-share loss of $1.11 for that timeframe to turn into a $0.27 profit per share this fiscal year. Sales are still expected to roll in at only $2.03 billion this year, but are projected to improve to $2.08 billion in fiscal 2014, when the company should earn $0.43 per share. That's officially a turnaround.

It's not just a pipedream either. Last quarter, LOGI beat estimates for the top line as well as the bottom line. Better still, the company is now on a mission to divest all divisions and product lines that aren't profitable by the end of 2014. That's music to investors' ears, played by Logitech speakers.

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