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Why Is Garmin (GRMN) Down 1.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Garmin (GRMN - Free Report) . Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Garmin due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Garmin has reported first-quarter 2024 pro-forma earnings of $1.42 per share, beating the Zacks Consensus Estimate by 42%. The bottom line improved on a year-over-year basis.
Net sales were $1.38 billion, which surpassed the Zacks Consensus Estimate of $1.24 billion. The figure increased 20% from the year-ago quarter.
Year-over-year growth in the top line was attributed to strength in the Fitness and Auto OEM segments. The growing Outdoor and Marine segments contributed well.
Segmental Details
Outdoor (26.5% of net sales): The segment generated sales of $366.2 million in the reported quarter, increasing 11% year over year due to strength in the wearables category.
Fitness (24.8%): The segment generated sales of $342.9 million, which increased 40% from the year-ago quarter, owing to solid demand for the company’s advanced wearables.
Aviation (15.7%): The segment generated sales of $216.9 million, increasing 2% on a year-over-year basis. This was driven by the solid momentum in OEM product categories.
Marine (23.6%): Garmin generated sales of $326.7 million from the segment, increasing 17% on a year-over-year basis. This was driven by benefits from the JL Audio buyout.
Auto OEM (9.4%): The segment generated sales of $128.9 million, up 58% from the prior-year quarter. This was primarily attributed to growing shipments of domain controllers to BMW.
Operating Results
In the first quarter, the gross margin was 58.1%, which expanded 120 basis points (bps) from the year-ago period.
Garmin’s operating expenses of $503.7 million were up 10.5% from the prior-year quarter due to rising personnel costs. As a percentage of revenues, the figure contracted 320 bps year over year to 36.5%.
The operating margin was 21.6% in the reported quarter, which expanded 440 bps year over year.
Balance Sheet & Cash Flow
As of Dec 30, 2023, cash, cash equivalents and marketable securities were $2.2 billion, down from $3.1 billion as of Dec 30, 2023.
In the first quarter of 2024, Garmin generated an operating cash flow of $435.3 million and a free cash flow of $402 million.
The company paid out a quarterly dividend of approximately $140 million.
2024 Guidance
Garmin has reiterated its 2024 revenue guidance at $5.75 billion.
The company expects pro-forma earnings of $5.40 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Garmin has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Garmin has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Garmin is part of the Zacks Electronics - Miscellaneous Products industry. Over the past month, KLA (KLAC - Free Report) , a stock from the same industry, has gained 12.9%. The company reported its results for the quarter ended March 2024 more than a month ago.
KLA reported revenues of $2.36 billion in the last reported quarter, representing a year-over-year change of -3%. EPS of $5.26 for the same period compares with $5.49 a year ago.
KLA is expected to post earnings of $6.08 per share for the current quarter, representing a year-over-year change of +12.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for KLA. Also, the stock has a VGM Score of D.
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Why Is Garmin (GRMN) Down 1.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Garmin (GRMN - Free Report) . Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Garmin due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Garmin's Q1 Earnings & Sales Beat Estimates, Rise Y/Y
Garmin has reported first-quarter 2024 pro-forma earnings of $1.42 per share, beating the Zacks Consensus Estimate by 42%. The bottom line improved on a year-over-year basis.
Net sales were $1.38 billion, which surpassed the Zacks Consensus Estimate of $1.24 billion. The figure increased 20% from the year-ago quarter.
Year-over-year growth in the top line was attributed to strength in the Fitness and Auto OEM segments. The growing Outdoor and Marine segments contributed well.
Segmental Details
Outdoor (26.5% of net sales): The segment generated sales of $366.2 million in the reported quarter, increasing 11% year over year due to strength in the wearables category.
Fitness (24.8%): The segment generated sales of $342.9 million, which increased 40% from the year-ago quarter, owing to solid demand for the company’s advanced wearables.
Aviation (15.7%): The segment generated sales of $216.9 million, increasing 2% on a year-over-year basis. This was driven by the solid momentum in OEM product categories.
Marine (23.6%): Garmin generated sales of $326.7 million from the segment, increasing 17% on a year-over-year basis. This was driven by benefits from the JL Audio buyout.
Auto OEM (9.4%): The segment generated sales of $128.9 million, up 58% from the prior-year quarter. This was primarily attributed to growing shipments of domain controllers to BMW.
Operating Results
In the first quarter, the gross margin was 58.1%, which expanded 120 basis points (bps) from the year-ago period.
Garmin’s operating expenses of $503.7 million were up 10.5% from the prior-year quarter due to rising personnel costs. As a percentage of revenues, the figure contracted 320 bps year over year to 36.5%.
The operating margin was 21.6% in the reported quarter, which expanded 440 bps year over year.
Balance Sheet & Cash Flow
As of Dec 30, 2023, cash, cash equivalents and marketable securities were $2.2 billion, down from $3.1 billion as of Dec 30, 2023.
In the first quarter of 2024, Garmin generated an operating cash flow of $435.3 million and a free cash flow of $402 million.
The company paid out a quarterly dividend of approximately $140 million.
2024 Guidance
Garmin has reiterated its 2024 revenue guidance at $5.75 billion.
The company expects pro-forma earnings of $5.40 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Garmin has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Garmin has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Garmin is part of the Zacks Electronics - Miscellaneous Products industry. Over the past month, KLA (KLAC - Free Report) , a stock from the same industry, has gained 12.9%. The company reported its results for the quarter ended March 2024 more than a month ago.
KLA reported revenues of $2.36 billion in the last reported quarter, representing a year-over-year change of -3%. EPS of $5.26 for the same period compares with $5.49 a year ago.
KLA is expected to post earnings of $6.08 per share for the current quarter, representing a year-over-year change of +12.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for KLA. Also, the stock has a VGM Score of D.