The technology sector is experiencing significant growth, driven by digital transformation, business investment in advanced technologies to streamline operations and increase productivity. Moreover, the growing demand for faster connectivity, consumer electronics, and advanced networking equipment makes the industry outlook even more optimistic.
Global IT spending is expected to reach his $5.6 trillion in 2024, an increase of 8% from 2023. Demand for technology services is increasing due to operational automation, digital transformation initiatives, and the adoption of advanced technologies such as generative AI. The global IT services market is expected to reach $1.36 trillion this year and will continue to grow at a CAGR of 6.8%, reaching $1.77 trillion by 2028.
Meanwhile, enterprises’ advanced networking needs are being driven by new technologies such as edge computing, IoT devices, and cloud services. These technologies require robust electronics and high-speed networking devices to function properly. The global optical communications and networking equipment market is expected to grow at a CAGR of 15.8% to reach $107.46 billion by 2030.
Additionally, the demand for advanced hardware is increasing to meet complex processing needs and increasing workloads. The IT hardware market is expected to grow by 7.9% and reach $191.03 billion by 2029. As devices become more automated, connected, and smarter, the demand for high-quality components will also increase.
The global electronic components market is expected to grow at a compound annual growth rate of 6.8% and reach $368.4 billion by 2032. Investor interest in tech stocks is evident in the Technology Select Sector SPDR Fund (XLK), which has returned 29% over the past year.
Given these supportive trends, let’s analyze the fundamentals of the five tech stocks listed above.
Zoom Video Communications, Inc. (ZM)
ZM provides unified communications platforms in the Americas, Asia Pacific, Europe, the Middle East, and Africa. The company offers Zoom Meetings, Zoom Phone, Zoom Chat, Zoom Rooms, Zoom Conference Room Connector, Zoom Events, OnZoom, and Zoom Webinars.
On March 25, 2024, ZM launched Zoom Workplace, an AI-powered collaboration platform, on his AWS Marketplace. This makes it easy for customers to purchase Zoom Workplace products such as Meetings and Team Chat through his AWS Marketplace, simplifying technology purchases and optimizing AWS resources.
On March 25, 2024, ZM and Avaya announced a strategic partnership to improve the collaboration experience for global enterprises. Avaya will integrate ZM’s AI-supported platform, Zoom Workplace, into its communications and collaboration suite.
This integration provides Avaya’s enterprise customers with streamlined communications management and enhanced collaboration tools, allowing them to preserve their existing investments while taking advantage of ZM’s innovative solutions.
In terms of his EBIT margin over the past 12 months, ZM is 13.21%, which is 175.5% higher than the industry average of his 4.80%. The trailing 12-month leveraged FCF margin of 33.24% is 248.7% higher than the industry average of 9.53%. Similarly, CapEx/Sales for the past 12 months was 2.80%, which is 20.8% higher than the industry average of 2.32%.
ZM’s sales for the fourth quarter ended January 31, 2024 were $1.15 billion, an increase of 2.6% year over year. The company’s non-GAAP net income and net income per share increased 21.1% to $443.97 million and 16.4% to $1.42, respectively, compared to the same period last year. Additionally, the company’s total debt was $1.92 billion as of January 31, 2023, and $1.91 billion as of January 31, 2024. Analysts are forecasting ZM’s EPS and revenue for the quarter ending April 30, 2024. Sales increased by 2.4% and 2% from the same period last year to $1.19 billion and $1.13 billion, respectively. The company has surpassed consensus EPS estimates in each of the last four quarters. Shares have declined 4.7% over the past six months, closing at $59.45.
ZM’s strong fundamentals are reflected in its POWR Rating. The overall rating is B, which is equivalent to a “buy” in our own rating system. POWR Ratings evaluates stocks based on 118 different factors, each with its own weighting.
B grade for growth, value, and quality. Ranked #7 out of 79 stocks in the Technology & Services industry.
TDK Corporation (TTDKY)
TTDKY and its subsidiaries, headquartered in Tokyo, Japan, manufacture and sell electronic components internationally. [Business description] The Company operates its business through passive components, sensor application products, magnetic application products, energy application products and other segments.
April 9, 2024 TTDKY introduces the B40910 series hybrid polymer capacitors that offer very high AC current capability (up to 4.6A), low ESR, and wide temperature range. These capacitors are suitable for demanding applications in automotive and industrial electronics.
TTDKY and Goodyear announced on January 9, 2024, that they will be working together to develop tire intelligence technologies. The goal is to create sensors and related technology for tires and automobiles, improving safety and performance.
In terms of return on equity over the past twelve months, TTDKY is 6.31%, which beats the industry average of his 3.61% by 74.9%. Similarly, its trailing twelve month return on assets of 3.73% is 56.1% higher than the industry average of 2.39%. Asset turnover for the past 12 months was 0.64x, 5.3% higher than the industry average of 0.61x.
His TTDKY’s net sales for the third fiscal quarter ended December 31, 2023 were 559.25 billion yen (US$3.62 billion). Operating income increased 2.7% year on year to 70.2 billion yen ($453.92 million). Similarly, net income attributable to owners of the parent and earnings per share were 65.3 billion yen ($422.23 million) and 171.88 yen, respectively, an increase of 30.8% year over year.
No wonder TTDKY has an overall rating of A, which equates to Strong Buy, in our proprietary rating system.
Growth, stability, and mood grade is B. Within the Technology Hardware industry with a B rating, the company ranks #4 out of his 38 stocks.
Brother Industries, Ltd. (BRTHY)
BRTHY, headquartered in Nagoya, Japan, manufactures and sells communications and printing equipment in Japan, the Americas, Europe, Asia, Oceania, the Middle East, Africa, and internationally. The company operates in the following segments: Printing & Solutions, Machinery, Domino’s, Nissay, Personal & Home, and Network & Content.
On February 2, 2024, BRTHY announced the completion of the third factory of its manufacturing subsidiary BROTHER INDUSTRIES (PHILIPPINES), INC. It is based in Tanauan City, Batangas. The new facility will produce printers, all-in-ones, label systems and consumables with solar panels that contribute to the use of renewable energy.
In terms of CapEx/Sales over the past 12 months, BRTHY’s 4.73% beats the industry average of 2.32% by 103.9%. Similarly, the company’s net profit margin for the past 12 months was 5.24%, which was 100.9% higher than the industry average of 2.61%. Moreover, the company’s He EBITDA margin for the past 12 months was 13.37%, which is 39.6% higher than the industry average of 9.58%.
BRTHY’s total revenue for the third quarter ended December 31, 2023 was JPY 213.13 billion (US$1.38 billion). The company’s gross profit increased 11.4% year-on-year to 90.79 billion yen ($587.05 million). Additionally, net income increased 39.3% year-on-year to 17.71 billion yen ($114.51 million), and earnings per share increased 39.3% year-on-year to 69.11 yen.
Street expects BRTHY’s revenue for the quarter ending September 30, 2024 to be his $1.37 billion, up 3.2% year over year. Over the past year, BRTHY stock has risen 25.3%, and most recently closed at $37.
BRTHY’s positive outlook is reflected in its POWR rating. The overall rating is A, which equates to a “strong buy” according to our own rating system.
Graded A for Value, Dynamics, and Stability, and B for Quality. Ranked #1 out of 43 stocks in the Technology & Electronics industry.
N-able, Inc. (NABL)
NABL provides cloud-based software solutions for managed service providers. The company’s solutions enable MSPs to support the digital transformation and growth of small and medium-sized businesses. Its software platform serves as an operating system for MSP partners and is designed as an enterprise-grade solution that can scale as your business grows.
In terms of gross profit margin over the past 12 months, NABL reached 84.27%, which beats the industry average of his 48.90% by 72.3%. Similarly, the company’s return on assets for the past 12 months was 2.01%, which was 33.3% higher than the industry average of 1.51%. Moreover, his EBIT margin for the company over the past 12 months was 16.83%, which is 250.8% higher than the industry average of 4.80%.
NABL’s subscription and other revenue for the fourth fiscal quarter ended December 31, 2023 increased 13.2% year over year to $108.42 million. Non-GAAP gross profit increased 12.5% year over year to $91.65 million. The company’s non-GAAP operating income increased 25% year over year to $33.28 million.
Additionally, non-GAAP net income increased 10.3% compared to the prior year period to $19.83 million. Additionally, his non-GAAP earnings per share increased 10% year over year to $0.11.
Analysts expect NABL’s earnings per share and revenue for the quarter ending March 31, 2024 to increase by 16.8% year over year to US$0.9 million and US$111.19 million, respectively. I am. The company has beat Street EPS estimates in each of the last four quarters. Shares have declined 6.5% over the past six months, closing the last trade at $12.19.
NABL’s strong outlook is reflected in its POWR rating. The overall rating is B, which is equivalent to a “buy” in our own rating system.
Mood grade is A, Growth and Stability grade is B. It is ranked 6th in the Technology – Services industry.
Gilat Satellite Networks, Inc. (GILT)
Headquartered in Petah Tikva, Israel, GILT and its subsidiaries provide satellite-based broadband communications solutions in Israel, the United States, Peru and internationally. The company operates through its three segments: Satellite Networks, Integrated Solutions, and Network Infrastructure and Services.
April 9, 2024 GILT is the next multi-million dollar company for military applications designed to provide secure high-speed satellite communications with advanced capabilities for battlefield superiority. announced the development of generation SOTM/SOTP modems and highlighted the company’s expertise in deployment. – Significant solutions and customer confidence in providing innovative technology.
On April 9, 2024, GILT announced a multi-million dollar order from a leading IFC service provider to improve in-flight connectivity with Taurus Aero modems. This underscored IFC’s continued efforts to provide advanced satellite communications solutions and best-in-class IFC. – Aviation experience.
In terms of EBIT margin over the past 12 months, GILT reached 10.55%, which was 120.1% higher than the industry average of 4.80%. EBITDA margin for the trailing twelve months was 15.59%, which was 62.8% higher than the industry average of 9.58%. Similarly, the company’s return on assets for the past 12 months was 6.53%, which was 173% higher than the industry average of 2.39%.
GILT’s revenue for the year ended December 31, 2023 was $266.09 million, an increase of 10.9% from the previous year. Non-GAAP gross profit increased 21.4% year over year to $105.84 million. Non-GAAP net income increased 88.7% compared to the prior year period to $19.91 million. Additionally, non-GAAP EPS of $0.35 increased 84.2% year-over-year.
Street expects GILT’s sales for the quarter ending March 31, 2024 to be $77.1 million, an increase of 30.8% year over year. Earnings per share (EPS) for fiscal 2025 is expected to be $0.39, an increase of 18.2% from the previous year. Shares have increased 9.7% over the past year, and most recently closed at $5.31.
GILT’s POWR rating reflects a solid outlook. The overall rating is A, which equates to a “strong buy” according to our own rating system.
Ranked #1 out of 47 stocks in the Technology – Telecommunications/Networks industry. It gets an A grade for mood and a B grade for value.