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Author: dont2 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127  
Subject: Re: zbra SSG Form Date: 1/7/2001 4:05 PM
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Suggestions on evaluating ZBRA:

For your financial data source, go to:

http://www.marketguide.com/MGI/

Enter ZBRA in the query field, read the snapshot that comes up, and then click on the blue menus on the left for detailed data. The earnings estimate and comparison menus are particularly helpfull.

For what its worth, in my opinion these are the pertinent factors regarding ZBRA:

ZBRA has a long term growth rate of about 25% in sales (last year and average for last 5 years) and around 20% annually in earnings. This is the basis for the current PE. Comparison of PEs by themselves are meaningless - they only make sense in relation to growth rates. A rough rule of thumb is that a stock is fairly priced if PE = growth rate. ZBRA trailing PE of 19 is consistent with its 20% growth rate. To illustrate why, consider that the analyst's consensus is that ZBRA earnings will grow to $3.19 per share in 2001. If the stock price does not change, this would bring the PE down to 13 by the end of the year. However, because it is likely ZBRA will continue to grow in 2002, it is more likely that it will continue to sell at a PE near 20 at year end and the price will rise to around $60/share.

The financial risk to ZBRA of an economic slowdown or even recession is minimal. Notice that ZBRA has virtually no debt and that the current price is only ten times the free cash flow. This means that the earnings understate the actual cash generated by a substantial amount (accounting charges that don't get paid out)and they could easily ride out any economic downturn.

Other points to note are that ZBRA's 16% net profit margins, 23% return on investment, and revenue generated per employee are all better than the industry average, indicating an efficient, well run business.

The Motley Fool tutorials can give you a lot more background on other financial measures that help evaluate companies. Those mentioned here are the primary ones I use to periodically review my investments and new investment candidates. I just finished that review today. As a result I will sell a few holdings and allocate the money to buying more of some others. ZBRA is on my "buy more" list for this year.

Hope this helps a bit. Again, it is only my opinion. I'm sure others may have a different point of view, which I would be interested in seeing.
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