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Garmin Up 40.6% Year to Date: How Should You Approach the Stock?

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Garmin‘s (GRMN - Free Report) shares have gained 40.6% year to date compared with the industry’s return of 15.3%. It has also outpaced the Zacks Computer & Technology sector’s rise of 20.3% and the S&P 500 index’s appreciation of 17.3%.

The company has been benefiting from its portfolio strength which is driving its momentum across various end-markets like automotive, marine, healthcare and aviation. 

Growing efforts toward product innovation, diversification and market expansion are benefiting the performance of its segments, especially Fitness, Marine and Auto OEM.

Garmin Ltd. Price and Consensus

 

Garmin Ltd. Price and Consensus

Garmin Ltd. price-consensus-chart | Garmin Ltd. Quote

 

Expanding Portfolio Boosts Garmin’s Prospects

The company’s standout offerings in adventure watches, fitness wearables, avionics, marine electronics, audio equipment and automotive products are noteworthy.

Its expanding Venu, Lily and Vivoactive smartwatch series — featuring new health and wellness capabilities such as body battery energy monitoring, advanced sleep tracking, stress and respiration analysis and heart rate monitoring — have been fueling growth in its Fitness segment.

The introduction of the Forerunner 165 Series, an affordable GPS-running smartwatch that offers personalized training plans and health metrics on a vibrant AMOLED display, strengthened Garmin’s adventure watch lineup.

The recent launch of the Edge 1050 premium cycling computer, featuring a vivid color touchscreen display, a built-in speaker for audible feedback and Garmin Pay contactless payments, is a plus.

GRMN launched the Descent Mk3, a cutting-edge watch-style dive computer, and the Descent T2 transceiver with advanced SubWave sonar technology, offering features like diver-to-diver messaging and tank pressure monitoring for enhanced underwater communication and safety. 

It also introduced the eTrex Solar, their first handheld GPS with solar charging capabilities, providing virtually limitless battery life for outdoor enthusiasts on extended adventures.

The unveiling of wireless trucking headsets - dezl Headset 110 and 210, which offers superior audio quality and comfort for long-haul drivers, is a positive.

The company recently unveiled the Approach Z30 smart laser rangefinder, featuring a range relay function that transmits distance measurements to a compatible Garmin smartwatch or the Garmin Golf smartphone app. 

GRMN also launched its first cellular-based dog tracking collar, the Alpha LTE, enabling users to track their dogs' movements via a smartphone or Alpha handheld device. These innovations are expected to further strengthen Garmin’s outdoor segment in the near future.

The company’s introduction of a comprehensive avionics modernization program for the popular Citation CJ2 business jet, incorporating new technologies and features aimed at reducing pilot workload and enhancing safety, remains positive for its aviation segment.

The company’s launch of JL Audio Custom Fit speakers, which offer extended high-frequency response and feature DMA-optimized motor systems, is noteworthy. It is well-poised to gain traction among various boat makers and owners.

Garmin introduced the GPSMAP 16x3 chart plotters, equipped with a high-resolution 16-inch touchscreen that delivers excellent clarity and visibility in direct sunlight, including while wearing polarized sunglasses, along with integrated navigation and sonar capabilities.

It recently expanded its Force Kraken trolling motor series with a new 48-inch shaft length to fit a wider variety of boats and introduced the Panoptix PS-22 Ice Fishing Bundle, an ultraportable live sonar solution for winter fishing. These additions have added further strength to Garmin’s marine segment.

Conclusion

GRMN’s growing efforts to expand its product portfolio will sustain its customer momentum across diverse markets. This in turn will drive its financial performance.

The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $1.43 billion, indicating a growth of 12.1% year over year. The consensus mark for earnings stands at $1.45 per share, indicating year-over-year improvement of 2.8%. The EPS estimate has moved upward by 1.4% in the past 30 days.

However, weakness in the aftermarket product categories remains concerning for the Aviation segment which has been witnessing sluggish growth. 

Rising macroeconomic uncertainties, market volatility and inflationary pressure are concerns.

Moreover, Garmin has a Value Score of D which reflects a stretched valuation. Hence, investors should wait for a better entry point.

Stocks to Consider

Garmin currently carries a Zacks Rank #3 (Hold). 

Some other top-ranked stocks in the broader technology sector are Audioeye (AEYE - Free Report) , Arista Networks (ANET - Free Report) and Badger Meter (BMI - Free Report) , each flaunting Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Audioeye’s shares have surged 341.3% in the year-to-date period. AEYE’s long-term earnings growth rate is currently projected at 25%.

Arista Network’s shares have rallied 47.2% in the year-to-date period. ANET’s long-term earnings growth rate is currently projected at 17.2%.

Badger Meter’s shares have returned 32.3% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 17.91%.

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