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Garmin (GRMN)
NYSE:GRMN
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Garmin
(NYSE:GRMN)82Outperform
Positive Factors
Financial Performance
Garmin reported another strong earnings beat for 4Q24 and provided full-year guidance for 2025 that aligns more with the high end of expectations.
Market Demand
Wearables demand remains robust, boosting revenue.
Product Innovation
Ongoing innovation and new product development, including new halo product categories, will open new markets that will continue to drive revenue and cash flow growth and increasing shareholder value creation.
Negative Factors
Auto OEM Segment
The Auto OEM segment continues to face headwinds from a muted production outlook.
Margin Expectations
Operating margin is expected to decrease slightly in 2025 compared to the previous year.
Valuation Concerns
Analyst maintains an Underperform rating, as Garmin's current valuation is seen as fully appreciated by the market.
Garmin (GRMN) vs. S&P 500 (SPY)
Market Cap
$42.70B
Dividend Yield1.34%
Average Volume (3M)953.44K
Price to Earnings (P/E)30.4
Beta (1Y)0.79
Revenue Growth20.44%
EPS Growth9.05%
CountryUS
Employees21,800
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)7.30
Shares Outstanding192,403,780
10 Day Avg. Volume961,549
30 Day Avg. Volume953,436
Financial Highlights & Ratios
PEG Ratio3.36
Price to Book (P/B)N/A
Price to Sales (P/S)6.78
Price to Cash Flow (P/CF)22.10
P/FCF Ratio22.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$224.40Price Target Upside2.31% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering6
Garmin Business Overview & Revenue Model
Company DescriptionGarmin Ltd. is a global leader in the design and manufacture of navigation and communication devices, catering to a variety of sectors including automotive, aviation, marine, outdoor, and fitness. The company is renowned for its innovative GPS technology and smart devices, which are used by consumers, businesses, and industries worldwide. Garmin’s product range includes wearable devices like smartwatches, handheld GPS units, dashboard cameras, and marine electronics, all aimed at enhancing user experiences in navigation and activity tracking.
How the Company Makes MoneyGarmin generates revenue primarily through the sale of its GPS-enabled products and services across five main segments: Fitness, Outdoor, Aviation, Marine, and Auto. Each segment contributes differently to the overall revenue, with the Fitness and Outdoor segments being the most significant in recent times, driven by the growing demand for wearable technology and activity tracking devices. The company also earns from map updates, subscription services, and applications that complement its hardware. Garmin's partnerships with automotive manufacturers for integrated navigation systems and aviation companies for cockpit solutions also play a crucial role in its revenue generation. Additionally, Garmin invests in continuous research and development to innovate and maintain its competitive edge, which helps drive sales and profitability.
Garmin Financial Statement Overview
Summary
Garmin demonstrates a robust financial profile with strong income growth, minimal leverage, and effective cash flow management. The company is financially stable with a solid asset base and high profitability, positioning it well for future growth.Income Statement
Garmin displayed strong revenue growth with a 20.46% increase from 2023 to 2024. The company maintains solid profitability, evidenced by a gross profit margin of 58.73% and a net profit margin of 22.42%. EBIT and EBITDA margins are both robust at 25.32%, reflecting efficient operations. Overall, the income statement indicates a healthy growth trajectory and strong operational performance.85
Very Positive
Balance Sheet
Garmin's balance sheet is characterized by low leverage with a debt-to-equity ratio of 0.02, indicating minimal reliance on debt financing. The equity ratio is high at 81.51%, showcasing financial stability and strong asset backing by equity. Return on equity is impressive at 17.98%, illustrating effective use of shareholders' funds. The balance sheet is solid, with strong equity and low liabilities.88
Very Positive
Cash Flow
Garmin's free cash flow grew by 4.88% from 2023 to 2024, highlighting effective cash management. The operating cash flow to net income ratio is 1.01, indicating that the company's net income is well-supported by cash operations. The free cash flow to net income ratio is strong at 0.88, demonstrating effective conversion of profits into cash. Overall, Garmin's cash flow statement shows healthy cash generation and financial flexibility.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.30B | 5.23B | 4.86B | 4.98B | 4.19B | Gross Profit |
| 3.70B | 3.00B | 2.81B | 2.89B | 2.48B | EBIT |
| 1.59B | 1.09B | 1.03B | 1.22B | 1.05B | EBITDA |
| 1.59B | 1.27B | 1.19B | 1.37B | 1.18B | Net Income Common Stockholders |
| 1.41B | 1.29B | 973.59M | 1.08B | 992.32M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.50B | 1.97B | 1.45B | 1.85B | 1.85B | Total Assets |
| 9.63B | 8.60B | 7.73B | 7.85B | 7.03B | Total Debt |
| 134.89M | 113.03M | 114.54M | 70.04M | 75.96M | Net Debt |
| -1.94B | -1.58B | -1.16B | -1.43B | -1.38B | Total Liabilities |
| 1.78B | 1.59B | 1.53B | 1.74B | 1.52B | Stockholders Equity |
| 7.85B | 7.01B | 6.20B | 6.11B | 5.52B |
| Cash Flow | Free Cash Flow | |||
| 1.24B | 1.18B | 542.07M | 702.84M | 947.80M | Operating Cash Flow |
| 1.43B | 1.38B | 788.26M | 1.01B | 1.14B | Investing Cash Flow |
| -393.33M | -332.97M | -145.12M | -475.37M | -260.52M | Financing Cash Flow |
| -626.86M | -636.51M | -840.62M | -486.71M | -461.76M |
Garmin Technical Analysis
Neutral
219.34
Price Trends
216.24
Positive
207.37
Positive
187.84
Positive
Market Momentum
1.96
Positive
48.64
Neutral
44.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GRMN, the sentiment is Neutral. The current price of 219.34 is below the 20-day moving average (MA) of 221.45, above the 50-day MA of 216.24, and above the 200-day MA of 187.84, indicating a neutral trend. The MACD of 1.96 indicates Positive momentum. The RSI at 48.64 is Neutral, neither overbought nor oversold. The STOCH value of 44.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GRMN.
Garmin Risk Analysis
Garmin disclosed 36 risk factors in its most recent earnings report. Garmin reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Garmin Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $42.70B | 30.39 | 19.00% | 1.34% | 20.44% | 9.05% | |
76 Outperform | $3.59T | 38.01 | 136.52% | 0.52% | 2.61% | -2.14% | |
70 Outperform | $199.06B | 31.90 | 13.15% | 0.29% | 0.05% | 6.87% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
49 Neutral | $73.41M | ― | -55.36% | ― | -17.87% | 11.81% | |
47 Neutral | $2.15B | ― | -26.60% | ― | -3.50% | -148.99% | |
39 Underperform | $113.34M | ― | -122.20% | ― | -20.29% | -729.53% |
* Technology Sector Average
Performance Comparison
GRMN
Garmin
219.34
75.84
52.85%
AAPL
Apple
239.07
67.13
39.04%
FOSL
Fossil Group
1.38
0.47
51.65%
GPRO
GoPro
0.74
-1.60
-68.38%
JBLU
JetBlue Airways
6.11
-0.93
-13.21%
TMO
Thermo Fisher
531.71
-66.09
-11.06%
Garmin Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: 2.12% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
Garmin reported strong financial results with record revenue and growth across all segments, significant margin expansion, and a notable dividend increase. However, challenges remain in the aviation and auto OEM segments, with a higher effective tax rate impacting profitability.Highlights
Record-Breaking Revenue and Growth
Garmin delivered a consolidated revenue increase of 23% to $1.82 billion for Q4 2024, setting a new fourth-quarter record. For the full year, consolidated revenue increased 20% to $6.3 billion.
Strong Performance Across All Segments
Each of Garmin's five business segments achieved growth and record revenue. Fitness revenue increased 32%, outdoor revenue increased 16%, marine revenue grew 17%, and auto OEM revenue surged by 44%.
Significant Margin Expansion
Gross margin expanded by 100 basis points to 59% in Q4 2024, and operating income increased 52% year-over-year, resulting in a 28% operating margin.
Dividend Increase
Garmin proposed an annual dividend of $3.60 per share, reflecting a 20% increase over the prior dividend.
Notable Product Launches
New product launches included the Lilly 2 Active GPS smartwatch and the Descent X50i dive computer, which have been well-received in their respective markets.
Lowlights
Aviation Segment Challenges
While aviation revenue increased 4% to $877 million, the operating income decreased 7% year-over-year due to increased R&D spending.
Softening Auto OEM Market Outlook
The auto OEM segment faced challenges with a softer than expected market outlook for 2025, particularly affecting higher-end automakers' performance in the China market.
High Effective Tax Rate
The full-year 2024 pro forma effective tax rate increased to 16.7% from 8.5% in the prior year, impacting overall profitability.
Company Guidance
During Garmin Ltd.'s fourth quarter 2024 earnings call, the company reported strong financial performance metrics, including a 23% year-over-year increase in consolidated revenue to a record $1.82 billion, with growth seen across all five business segments. Gross margin improved by 100 basis points to 59%, and operating income rose by 52% to reach 28%. The pro forma EPS increased by 40% to $2.41. For 2024, Garmin achieved a 20% increase in consolidated revenue to $6.3 billion, with an operating income of $1.6 billion and an operating margin of 25%. Looking ahead to 2025, Garmin anticipates an 8% revenue increase to $6.8 billion and proposes a 20% increase in its annual dividend to $3.60 per share. The company also expects fitness, outdoor, and marine segments to grow by approximately 10%, 10%, and 4% respectively, while aviation and auto OEM segments are projected to grow by 5% and 7%. Garmin plans to invest in growth, with $350 million in capital expenditures expected for 2025, alongside a projected free cash flow of approximately $1.1 billion.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.