ZAGG ZAGG INC
Sector financial performance:
This company, primarily a designer and distributer of mobile devices screen protection (glass and film), keyboard, and mobile power solution products, has been grouped into screen shield sector in personal items industry.
It seems that, based on the typical company data, the demand, from retail customer and international market, for screen protection products has been solid and gradually growing in the past three years (3-7% annual growth rate).
The typical companies’ gross margin is about 32-34%. With 20-24% SG&A as percentage of sales, the typical operating margin is about 9-10%.
The typical average stock price/cash flow ratio is about 13.
It seems that the demand for traditional screen protection products of this company has been solid and growing while slowly in the past several years. It seems that this company has been successful in expanding into new power management market of products by acquisition.
The fiscal 2017 compared with the 2016
Organic sales increased 23% (excluding acquisition) primarily due to increase in revenue of power management and screen protection products.
The fiscal 2016 compared with 2015
Organic sales increased 7% (excluding acquisition) primarily due to increase in revenue of screen protection products.
The Fiscal 2015 compared with 2014
Organic sales increased 3% (excluding acquisition) primarily due to increase in screen protection products.
Its gross margin has decreased from around 32% in 2014 down to about 30% of 2017 due to diluting of acquired business (with lower gross margin). With its flat SG&A as percentage of sales (about 22%), its operating margin still decreased to about 8% in 2017.
This stock currently has a stock price/cash flow ratio of 13. We think that its stock is being relatively undervalued considering its success in merging acquired business including bringing down spending in SG&A and increasing revenue.
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