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Garmin (GRMN) Up 5.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Garmin (GRMN - Free Report) . Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Garmin due for a pullback? 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 drivers.
Garmin reported second-quarter 2024 pro-forma earnings of $1.58 per share, beating the Zacks Consensus Estimate by 12.9%. The bottom line improved 9% on a year-over-year basis.
Net sales were $1.51 billion, which surpassed the Zacks Consensus Estimate of $1.44 billion. The figure increased 14% from the year-ago quarter.
Year-over-year growth in the top line was attributed to the solid momentum in the Fitness, Marine and Auto OEM segments.
However, sluggishness in the Outdoor segment was concerning.
Segmental Details
Outdoor (29.2% of Net Sales): The segment generated sales of $439.9 million in the reported quarter, decreasing 2% year over year due to weak demand for Garmin’s adventure watches.
Fitness (28.4%): The segment generated sales of $428.4 million, which increased 28% from the year-ago quarter, owing to solid demand for the company’s wearables.
Aviation (14.5%): The segment generated sales of $218.2 million, increasing 0.4% on a year-over-year basis. This was driven by the solid momentum in OEM product categories. However, weakness in the aftermarket product categories was concerning.
Marine (18.1%): Garmin generated sales of $272.95 million from the segment, increasing 26% on a year-over-year basis. This was driven by benefits from the JL Audio buyout.
Auto OEM (9.8%): The segment generated sales of $147.2 million, up 41% from the prior-year quarter. This was primarily attributed to growing shipments of domain controllers.
Operating Results
In the second quarter, the gross margin was 57.3%, which contracted 20 basis points (bps) from the year-ago period.
Garmin’s operating expenses of $520.9 million grew 9.6% from the prior-year quarter due to rising personnel costs. As a percentage of revenues, the figure contracted 130 bps year over year to 34.6%.
The operating margin was 22.7% in the reported quarter, which expanded 120 bps year over year.
Balance Sheet & Cash Flow
As of Jun 29, 2024, cash, cash equivalents and marketable securities were $2.22 billion, up from $2.19 billion as of Mar 30, 2024.
In the second quarter of 2024, Garmin generated an operating cash flow of $255 million and a free cash flow of $218 million compared with the operating cash flow of $435 million and a free cash flow of $402 million reported in the prior quarter.
The company paid out a quarterly dividend of $144 million and repurchased $10 million of shares in the reported quarter.
2024 Guidance
Garmin has raised its 2024 revenue guidance from $5.75 billion to $5.95 billion.
The company has also revised the pro-forma earnings per share guidance upward from $5.40 to $6.00.
It expects gross and operating margins of 57% and 21.3%, respectively.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Garmin has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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
Garmin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Garmin belongs to the Zacks Electronics - Miscellaneous Products industry. Another stock from the same industry, Flex (FLEX - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Flex reported revenues of $6.31 billion in the last reported quarter, representing a year-over-year change of -13.9%. EPS of $0.51 for the same period compares with $0.57 a year ago.
For the current quarter, Flex is expected to post earnings of $0.57 per share, indicating a change of -16.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Flex. Also, the stock has a VGM Score of B.
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Garmin (GRMN) Up 5.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Garmin (GRMN - Free Report) . Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Garmin due for a pullback? 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 drivers.
Garmin's Q2 Earnings & Sales Beat Estimates, Rise Y/Y
Garmin reported second-quarter 2024 pro-forma earnings of $1.58 per share, beating the Zacks Consensus Estimate by 12.9%. The bottom line improved 9% on a year-over-year basis.
Net sales were $1.51 billion, which surpassed the Zacks Consensus Estimate of $1.44 billion. The figure increased 14% from the year-ago quarter.
Year-over-year growth in the top line was attributed to the solid momentum in the Fitness, Marine and Auto OEM segments.
However, sluggishness in the Outdoor segment was concerning.
Segmental Details
Outdoor (29.2% of Net Sales): The segment generated sales of $439.9 million in the reported quarter, decreasing 2% year over year due to weak demand for Garmin’s adventure watches.
Fitness (28.4%): The segment generated sales of $428.4 million, which increased 28% from the year-ago quarter, owing to solid demand for the company’s wearables.
Aviation (14.5%): The segment generated sales of $218.2 million, increasing 0.4% on a year-over-year basis. This was driven by the solid momentum in OEM product categories. However, weakness in the aftermarket product categories was concerning.
Marine (18.1%): Garmin generated sales of $272.95 million from the segment, increasing 26% on a year-over-year basis. This was driven by benefits from the JL Audio buyout.
Auto OEM (9.8%): The segment generated sales of $147.2 million, up 41% from the prior-year quarter. This was primarily attributed to growing shipments of domain controllers.
Operating Results
In the second quarter, the gross margin was 57.3%, which contracted 20 basis points (bps) from the year-ago period.
Garmin’s operating expenses of $520.9 million grew 9.6% from the prior-year quarter due to rising personnel costs. As a percentage of revenues, the figure contracted 130 bps year over year to 34.6%.
The operating margin was 22.7% in the reported quarter, which expanded 120 bps year over year.
Balance Sheet & Cash Flow
As of Jun 29, 2024, cash, cash equivalents and marketable securities were $2.22 billion, up from $2.19 billion as of Mar 30, 2024.
In the second quarter of 2024, Garmin generated an operating cash flow of $255 million and a free cash flow of $218 million compared with the operating cash flow of $435 million and a free cash flow of $402 million reported in the prior quarter.
The company paid out a quarterly dividend of $144 million and repurchased $10 million of shares in the reported quarter.
2024 Guidance
Garmin has raised its 2024 revenue guidance from $5.75 billion to $5.95 billion.
The company has also revised the pro-forma earnings per share guidance upward from $5.40 to $6.00.
It expects gross and operating margins of 57% and 21.3%, respectively.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Garmin has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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
Garmin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Garmin belongs to the Zacks Electronics - Miscellaneous Products industry. Another stock from the same industry, Flex (FLEX - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Flex reported revenues of $6.31 billion in the last reported quarter, representing a year-over-year change of -13.9%. EPS of $0.51 for the same period compares with $0.57 a year ago.
For the current quarter, Flex is expected to post earnings of $0.57 per share, indicating a change of -16.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Flex. Also, the stock has a VGM Score of B.