The Zacks Computer – Mini Computers industry is thriving in the current market scenario. The demand for enterprise devices such as laptops, tablets, and smartphones is steady, benefitting key players like Apple (AAPL), HP (HPQ), and 3D Systems (DDD). The rise of 5G-enabled smartphones and innovative technologies like foldable and AI-infused devices are major growth drivers. Despite challenges like waning consumer PC demand and geopolitical upsets, the industry is pushing forward.
Industry Overview
The Zacks Computer – Mini Computers industry encompasses a variety of tech devices ranging from smartphones to 3-D printers. These gadgets run on different operating systems like iOS, Windows, and Android, powered by leading processors like Apple, Intel, and Qualcomm. The evolution of larger screens, better displays, and enhanced storage is propelling the demand for smartphones and laptops, with wearables gaining traction due to added healthcare features.
Key Trends in the Mini Computer Industry
Enterprise Adoption Remains Healthy: As businesses transition to hybrid work setups, the demand for laptops and tablets is on the rise. Smart devices with enhanced security features like biometrics are becoming essential for enterprise users.
Impressive Form Factor Drives Demand: The expansion of screen size, better displays, and advanced storage options are fueling the popularity of smartphones and tablets. Faster mobile processors and improved internet connectivity have made smartphones indispensable for consumers, especially for gaming purposes.
PCs Face Extinction Risk: With smartphones and tablets overshadowing traditional PCs, the latter face a threat of extinction. To stay relevant, PC makers are constantly upgrading hardware and adding services to attract consumers. However, emerging technologies like 5G and AI might expand the market for PCs.
Industry Performance and Future Outlook
The Zacks Computer – Mini Computers industry holds a Zacks Industry Rank #104, placing it among the top 41% of Zacks industries. With positive earnings forecasts and a 0.5% increase in 2024 earnings estimates as of October 31, 2023, the industry is on a promising trajectory. Despite recent underperformance compared to the S&P 500, the industry shows potential for growth.
On a valuation basis, the industry’s forward 12-month P/E ratio stands at 26.61X, above the S&P 500’s 21.02X but in line with the sector’s 26.72X. While past trading ranges have fluctuated between 13.92X and 32.32X, the current median ratio of 24.64X reflects the industry’s historical volatility.
Top Performers to Consider
Apple: With a Zacks Rank #3 (Hold), Apple is experiencing consistent demand for iPhones and expanding market reach in emerging economies. The services segment is also thriving, attracting more subscribers and enhancing customer engagement. Despite a slight decline in fiscal 2024 earnings estimates, Apple’s innovative approach and loyal customer base provide stability amidst market fluctuations.
Price and Consensus: AAPL
In-Depth Analysis of HP and 3D Systems Performance
The Resilience of HP Inc.
Amid the precarious economic landscape, HP Inc., ranked #3 by Zacks, exhibits a tenacious spirit through its unwavering commitment towards unveiling cutting-edge products. This unwavering focus stands tall as the cornerstone of its resilience in the tumultuous market conditions.
HP’s adeptness at product innovation and differentiation continues to propel its dominance in the PC and printer spheres, reinforcing its premier position in these competitive markets.
The Zacks Consensus Estimate depicts a steady trajectory for the fiscal 2024 earnings, standing firm at $3.45 per share over the last 30 days, a testament to HP’s robust performance. Despite enduring a 3.8% decline in shares year-to-date, HP’s fortitude remains unwavering.
Price and Consensus for HPQ
3D Systems: Navigating through Challenges
3D Systems, a #3 ranked company by Zacks, anticipates the stabilization of the dental market amidst inventory saturation in the supply chain and weaknesses in consumer spending trends. Despite expecting a slower rebound in 2024 compared to initial projections, the company sees promise in the long-term prospects of dental sales.
The migration from traditional orthodontic solutions to contemporary clear aligners is expected to bolster dental sales. Furthermore, asset management improvements and enhanced resource utilization are set to drive a significant reduction in total inventory during 2024, reaffirming its commitment to operational efficiency.
The Zacks Consensus Estimate for 2024 earnings exhibits promise, with a one-cent increase to 8 cents per share over the last 30 days. Although facing a 21.9% stock decline year-to-date, 3D Systems demonstrates its mettle amidst market challenges.
Price and Consensus for DDD
