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Here's Why Logitech Stock Soared to All-Time Highs Today

What happened

Shares of Logitech International (NASDAQ: LOGI) soared to all-time highs on Tuesday after the company posted earnings results for the second quarter of its fiscal 2021 that surpassed analyst estimates. It subsequently raised its guidance for the rest of the year, giving investors reason to cheer. As of noon EDT today, the stock was up 18% and has now nearly doubled year to date.

So what

In Q2, Logitech recorded $1.3 billion in net sales, an increase of 75% from the same quarter last year. This was the first quarter ever that the maker of computer keyboards and mice, webcams, and other devices generated over $1 billion in sales. Operating income increased a stunning 372% to $322 million.

Image source: Getty Images.

Logitech management cited a "hybrid work culture" (with people working from home at least some of the time) as part of the reason for the unprecedented sales. For example, sales of webcams were up 258% to $102 million, nearly 10% of total sales. Gaming was also a strong category for the company in Q2, with segment sales up 84%.

Because of these strong sales, full-year guidance was raised. Management originally guided for full-year sales growth of 10% to 13%. Now it believes sales will increase 35% to 40% year over year. Guidance for operating income was also raised accordingly. Previously it guided for $410 million to $425 million in adjusted operating income; now it expects $700 million to $725 million.

Now what

This was an incredible quarter for Logitech. But investors should remember these consumer discretionary sales are being driven by temporary external circumstances. One shouldn't expect the coronavirus pandemic to last forever or for consumers to continue buying shelter-at-home products, as they have this year. It creates a bumper year for Logitech, and that's great. But in time, I expect sales to revert to more normalized growth.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends Logitech International. The Motley Fool has a disclosure policy.


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