Zebra Technologies Gains From Business Strength Amid Headwinds

Zebra Technologies Corporation ZBRA is witnessing growth across the healthcare, manufacturing and retail & ecommerce end markets. Higher sales of mobile computing solutions are driving the company’s Connected Frontline segment. Revenues from the segment increased 20.6% year over year in the first quarter of 2026.

Solid demand for printing solutions, supplies and sensors, data capture and RFID products is boosting the Asset Visibility & Automation segment’s performance. In the first quarter, the segment’s sales increased 7.4% on a year-over-year basis. Driven by solid demand for its products, the company expects second-quarter 2026 net sales to increase in the band of 14-17% from the prior-year level.

Zebra Technologies has steadily strengthened its business through acquisitions. In March 2025, ZBRA acquired Photoneo, a market leader in the 3D machine vision solutions industry. The buyout enhances Zebra Technologies' portfolio of 3D machine vision solutions and addresses several challenges in high-value applications.

In October 2025, Zebra Technologies completed the acquisition of Elo Touch Solutions. The transaction expanded the company’s reach across retail, healthcare, industrial and hospitality markets. In the first quarter, acquisitions contributed 7.9% to total revenues. 

The company’s strong cash flow supports its shareholder-friendly policies. Its free cash flow amounted to $163 million in the first quarter, reflecting an increase of 3.2% year over year. In 2026, the company expects to generate more than $900 million in free cash flow.

ZBRA’s Price Performance

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In the past three month, this Zacks Rank #3 (Hold) company's stock gained 15.2% compared with the industry’s 18.6% growth.

Despite the positives, ZBRA is dealing with escalating costs and expenses. In first-quarter 2026, the company witnessed a 13.6% year-over-year increase in the cost of sales. The metric, as a percentage of total revenues, was high at 50.4%. Total operating expenses increased 17.1% year over year in the quarter. Escalating costs and expenses, if uncontrolled, may negatively impact profitability in the quarters ahead.

The company’s high debt level also remains another woe. Exiting the first quarter, its long-term debt totaled $2.39 billion, higher than $2.36 billion at 2025-end. Considering Zebra Technologies’ high debt level, its cash and cash equivalents of $114 million do not look impressive.

Stocks to Consider

Some better-ranked stocks from the same space are discussed below.

Helios Technologies HLIO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

HLIO delivered a trailing four-quarter average earnings surprise of 15.7%. In the past 60 days, the Zacks Consensus Estimate for Helios Technologies’ 2026 earnings has increased 5.5%.

Applied Industrial Technologies AIT presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 4.1%.

The Zacks Consensus Estimate for AIT’s fiscal 2026 earnings has improved 0.3% in the past 60 days.

Flowserve Corporation FLS presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 12.7%.

In the past 60 days, the consensus estimate for FLS’s 2026 earnings has remained stable.

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This article originally published on Zacks Investment Research (zacks.com).

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