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This outperformance can be attributed to its strong top-line growth backed by robust portfolio presence across multiple business segments, including Outdoor, Fitness, Aviation and Marine.
Garmin’s growing efforts toward product innovation, diversification and market expansion are boosting the performance of its segments, especially Fitness, Marine and Auto OEM.
Strong Fitness Growth Aids GRMN’s Top Line
In the first half of 2024, revenues increased 17% year over year to $2.89 billion. GRMN sold 8,545 units in the first half of 2024 compared with 7,372 in the first half of 2023.
The top line benefited from strong Fitness (27% of revenues) revenue growth (33% over the year-ago period), driven by solid demand for advanced wearables.
Auto OEM revenues (9% of revenues) surged (48% over the year-ago period) due to growth in domain controllers. Marine revenues (21% of revenues) increased (21% over the year-ago period) due to a strong contribution from its JL Audio acquisition.
Garmin raised its 2024 revenue guidance from $5.75 billion to $5.95 billion. Pro-forma earnings guidance increased from $5.40 per share to $6 per share.
Fitness revenues are now expected to grow 20% year over year. It also raised the Marine segment’s revenue growth rate to 15% for the year. However, Garmin maintained its 7% Outdoor revenue growth estimate as well as Auto OEM’s 50% growth rate for 2024.
The Zacks Consensus Estimate for 2024 revenues is pegged at $5.97 billion, indicating growth of 14.11% year over year.
The consensus mark for 2024 earnings is pegged at $6.05 per share, unchanged over the past 30 days, suggesting growth of 8.23% year over year.
Expanding Portfolio Aids GRMN’s Prospects
Garmin’s expanding Venu, Lily and Vivoactive smartwatch series, featuring new health and wellness capabilities, such as body battery energy monitoring, enhanced sleep tracking, stress and respiration analysis and heart rate monitoring, is a plus for its Fitness segment.
Its strong Fitness portfolio with new wearable launches helps in improving Garmin’s competitive position against the likes of Apple (AAPL - Free Report) , Fitbit parent Alphabet (GOOGL - Free Report) , Samsung and Huawei, among others. Year to date, Garmin shares have outperformed Apple and GOOGL, shares of which have returned 15.6% and 12.7%, respectively.
The launch of the Edge 1050 premium cycling computer with a vibrant color touchscreen display and built-in speaker for audible feedback, the Forerunner 165 Series, an affordable GPS-running smartwatch that offers customized training plans and health metrics on a vibrant AMOLED display and Garmin Pay mobile payments in the Fitness segment is a major positive.
The recent introduction of the Approach Z30 smart laser rangefinder, which has a range relay feature and sends distance measurements to a suitable Garmin smartwatch or the Garmin Golf smartphone app might gain traction in the Outdoor segment.
Garmin’s launch of the GC 245 and GC 255 cameras, specifically designed to enhance proximity awareness and confidence while docking, might anticipate a further rise in the Marine segment. However, weakness in the Aviation segment is noteworthy.
Strong Liquidity Aids GRMN’s Prospects
Garmin’s strong liquidity is noteworthy. As of June 29, 2024, it had approximately $3.4 billion of cash, cash equivalents and marketable securities.
In the first half of 2024, cash flow increased 25% over the same year-ago period to $690.6 million.
In the second quarter of 2024, GRMN paid a dividend of approximately $144 million and purchased $10 million of its stock.
Garmin now expects 2024 free cash flow to be approximately $900 million.
Zacks Rank & Valuation
Garmin’s Value Score of D suggests a stretched valuation at this moment. Although its strong portfolio is noteworthy, the modest growth prospect doesn’t justify the premium valuation.
Garmin stock is trading at a premium with a forward 12-month Price/Sales of 5.27X compared with the industry’s 1.51X.
GRMN carries a Zacks Rank #3 (Hold) at present, implying investors should wait for a better entry point into the stock.
Image: Bigstock
Garmin Rises 34% Year to Date: How Should You Play the Stock?
Garmin (GRMN - Free Report) shares are up 34.4% year to date (YTD), outperforming the broader Zacks Computer and Technology sector’s return of 19.9% and the Zacks Electronics-Miscellaneous Products industry’s appreciation of 12.3%.
This outperformance can be attributed to its strong top-line growth backed by robust portfolio presence across multiple business segments, including Outdoor, Fitness, Aviation and Marine.
Garmin’s growing efforts toward product innovation, diversification and market expansion are boosting the performance of its segments, especially Fitness, Marine and Auto OEM.
Strong Fitness Growth Aids GRMN’s Top Line
In the first half of 2024, revenues increased 17% year over year to $2.89 billion. GRMN sold 8,545 units in the first half of 2024 compared with 7,372 in the first half of 2023.
The top line benefited from strong Fitness (27% of revenues) revenue growth (33% over the year-ago period), driven by solid demand for advanced wearables.
Auto OEM revenues (9% of revenues) surged (48% over the year-ago period) due to growth in domain controllers. Marine revenues (21% of revenues) increased (21% over the year-ago period) due to a strong contribution from its JL Audio acquisition.
Garmin Ltd. Price and Consensus
Garmin Ltd. price-consensus-chart | Garmin Ltd. Quote
GRMN’s 2024 Guidance Positive
Garmin raised its 2024 revenue guidance from $5.75 billion to $5.95 billion. Pro-forma earnings guidance increased from $5.40 per share to $6 per share.
Fitness revenues are now expected to grow 20% year over year. It also raised the Marine segment’s revenue growth rate to 15% for the year. However, Garmin maintained its 7% Outdoor revenue growth estimate as well as Auto OEM’s 50% growth rate for 2024.
The Zacks Consensus Estimate for 2024 revenues is pegged at $5.97 billion, indicating growth of 14.11% year over year.
The consensus mark for 2024 earnings is pegged at $6.05 per share, unchanged over the past 30 days, suggesting growth of 8.23% year over year.
Expanding Portfolio Aids GRMN’s Prospects
Garmin’s expanding Venu, Lily and Vivoactive smartwatch series, featuring new health and wellness capabilities, such as body battery energy monitoring, enhanced sleep tracking, stress and respiration analysis and heart rate monitoring, is a plus for its Fitness segment.
Its strong Fitness portfolio with new wearable launches helps in improving Garmin’s competitive position against the likes of Apple (AAPL - Free Report) , Fitbit parent Alphabet (GOOGL - Free Report) , Samsung and Huawei, among others. Year to date, Garmin shares have outperformed Apple and GOOGL, shares of which have returned 15.6% and 12.7%, respectively.
The launch of the Edge 1050 premium cycling computer with a vibrant color touchscreen display and built-in speaker for audible feedback, the Forerunner 165 Series, an affordable GPS-running smartwatch that offers customized training plans and health metrics on a vibrant AMOLED display and Garmin Pay mobile payments in the Fitness segment is a major positive.
The recent introduction of the Approach Z30 smart laser rangefinder, which has a range relay feature and sends distance measurements to a suitable Garmin smartwatch or the Garmin Golf smartphone app might gain traction in the Outdoor segment.
Garmin’s launch of the GC 245 and GC 255 cameras, specifically designed to enhance proximity awareness and confidence while docking, might anticipate a further rise in the Marine segment. However, weakness in the Aviation segment is noteworthy.
Strong Liquidity Aids GRMN’s Prospects
Garmin’s strong liquidity is noteworthy. As of June 29, 2024, it had approximately $3.4 billion of cash, cash equivalents and marketable securities.
In the first half of 2024, cash flow increased 25% over the same year-ago period to $690.6 million.
In the second quarter of 2024, GRMN paid a dividend of approximately $144 million and purchased $10 million of its stock.
Garmin now expects 2024 free cash flow to be approximately $900 million.
Zacks Rank & Valuation
Garmin’s Value Score of D suggests a stretched valuation at this moment. Although its strong portfolio is noteworthy, the modest growth prospect doesn’t justify the premium valuation.
Garmin stock is trading at a premium with a forward 12-month Price/Sales of 5.27X compared with the industry’s 1.51X.
GRMN carries a Zacks Rank #3 (Hold) at present, implying investors should wait for a better entry point into the stock.
A Top-Ranked Stock to Buy
AudioEye (AEYE - Free Report) is a top-ranked stock in the broader sector, which is currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AEYE shares have returned a whopping 315.1% YTD. The long-term earnings growth rate for AudioEye is currently pegged at 25%.