Week to date, shares of Logitech International(NASDAQ: LOGI) were up 12% as of 10:58 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
The computer equipment brand reported improving sales trends in its latest business update. While sales fell 8% year over year in the fiscal second quarter ending in September, sales were up almost 9% over the previous quarter.
Logitech also said it is moving closer to finding a permanent replacement for former CEO Bracken Darrel, who left the company earlier this year to take the position at VF Corp.
Why the stock is climbing
Interim CEO Guy Gecht credited better execution and said the quarter's results demonstrate the potential of the business. Falling sales over the last year sent the stock crashing well off its highs, but Logitech is a solid brand with a large growth opportunity ahead. The company's long-term growth prospects are still intact, as it is still generating higher sales than before the pandemic.
LOGI Revenue (Quarterly) data by YCharts
Logitech is also demonstrating better expense controls, with lower operating expenses sending earnings per share up 72% year over year.
Is the stock a buy?
Management raised its full-year sales outlook but still expects a sales decline between 9% to 12% year over year. However, the rate of decline is lower than previously expected.
Logitech is not the value it was earlier this year, but the stock's forward price-to-earnings ratio of 24 is not that expensive considering the strong growth in earnings and future opportunity in a large industry. The gaming peripherals market, which is one of Logitech's biggest sales drivers, is worth nearly $33 billion, according to Statista. Logitech is also well positioned for growth in the video conferencing market.
It's not a screaming buy, but the stock could deliver market-beating gains, as it did before the pandemic.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Logitech International. The Motley Fool has a disclosure policy.
