LOGITECH INTERNATIONAL S.A. (LOGI) stock intrinsic value fair value estimate & owner earnings analysis

Logitech makes computer peripherals and accessories — mice, keyboards, webcams, gaming gear (mice, headsets, steering wheels), and video-conferencing room systems — sold globally under the Logitech, Blue, Astro, Streamlabs and other brands. Revenue is roughly $4.8 billion a year, spread across seven product categories, with Gaming (~29%) and Keyboards & Combos (~19%) the largest and Video Collaboration (~14%) growing fastest. The company carries no long-term debt and has steadily shrunk its share count through buybacks, from about 166 million shares a decade ago to about 148 million today. Demand for peripherals spiked sharply during the 2020-2021 work-from-home period, then swung the other way as Logitech worked down an inventory overbuild in fiscal 2022-2023 tied to the chip shortage. We treated those years as distorted and anchored our valuation on the three most recent fiscal years (2024-2026), which we believe reflect the business at its current, post-normalization scale. Owner earnings per share — cash the business generates after the spending needed to sustain it, non-cash stock compensation, and the seasonal swings in inventory, receivables and payables — were roughly $3.97, $4.85 and $4.89 over those three years; we used the median, about $4.85 per share, as our starting point. Fiscal 2026 owner earnings per share grew only 0.8% even though revenue grew 6% and every product category expanded — most of that growth was absorbed by a 25% jump in stock-based compensation and somewhat higher capital spending. We started our base case at a similarly modest 1% growth for the coming year, rising toward 2-3% a year as Video Collaboration (up 10% in fiscal 2026 on continued hybrid-office buildout) and Gaming (still growing in Europe and Asia-Pacific) contribute a richer mix, settling near 2% by year ten. Beyond the ten-year forecast we assumed owner earnings hold roughly flat in real terms — the R&D and marketing spending that sustains the product lineup is already charged against owner earnings, but we did not assume further margin gains given the competitive pressure described below. On that basis we value the shares at about $97. Our bear case assumes the tariff and competitive pressure already visible in fiscal 2026 gets worse: Logitech makes roughly 35% of its products at its own China-based factories, and this year's results already showed a more competitive pricing environment cutting into North American gaming sales. We assumed a sharp first-year hit to owner earnings per share (roughly 38%, comparable to the actual peak-to-trough decline the company experienced during the fiscal 2023 inventory correction), followed by only a partial recovery over the following decade as some market share is permanently ceded to lower-cost competitors. That produces a value of about $64 per share. Our bull case assumes Video Collaboration and Gaming both keep growing at a high-single-digit pace for several years as Logitech takes share from slower-moving competitors, stock-based compensation normalizes back down from its elevated fiscal 2026 level, and the new $1.4 billion, three-year buyback program approved in March 2026 continues shrinking the share count. That produces a value of about $139 per share. Because the downside case is a meaningful but not severe cut from the base case — reflecting a debt-free balance sheet and a demonstrated ability to recover from the fiscal 2023 trough — the margin-of-safety price is about $76 per share, a discount of roughly 21% to our base-case estimate. One point worth flagging: a majority of the value in our base case comes from what the business earns after the ten-year forecast window. We treated that as a flat, no-growth perpetuity rather than assuming continued expansion — replacement-cycle hardware businesses like this one face real long-run competitive pressure, even though there is no dated cliff (such as a patent expiry) that would argue for winding it down to zero instead. We were unable to find a reported net income figure in the structured filing data for fiscal years 2017 through 2020; we approximated it from reported diluted earnings per share for those years. This does not materially affect the valuation, since owner earnings is built from operating cash flow rather than net income.