Garmin Ltd
NYSE:GRMN
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Intrinsic Value
The intrinsic value of one GRMN stock under the Base Case scenario is 116.42 USD. Compared to the current market price of 180.17 USD, Garmin Ltd is Overvalued by 35%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Garmin Ltd
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Fundamental Analysis
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Garmin Ltd. is a leading global provider of navigation, communication, and wearable technology solutions, with a rich history dating back to its founding in 1989. The company began its journey by focusing on GPS technology for aviation, and over the years, it has successfully diversified its product offerings. Today, Garmin operates in several key markets, including automotive, aviation, marine, outdoor, and fitness. This strategic diversification has not only solidified Garmin’s position as a household name in GPS technology but has also allowed it to thrive in the booming wearables market, appealing to health-conscious consumers with its innovative smartwatches and fitness trackers. As the...
Garmin Ltd. is a leading global provider of navigation, communication, and wearable technology solutions, with a rich history dating back to its founding in 1989. The company began its journey by focusing on GPS technology for aviation, and over the years, it has successfully diversified its product offerings. Today, Garmin operates in several key markets, including automotive, aviation, marine, outdoor, and fitness. This strategic diversification has not only solidified Garmin’s position as a household name in GPS technology but has also allowed it to thrive in the booming wearables market, appealing to health-conscious consumers with its innovative smartwatches and fitness trackers. As the world increasingly leans towards technology-driven solutions for safety, recreation, and health management, Garmin finds itself well-positioned to retain and expand its market share.
Investors will appreciate Garmin's robust financial health and consistent revenue streams stemming from its diversified product lines. With a strong emphasis on research and development, Garmin continually innovates, ensuring its offerings remain competitive and relevant in the fast-paced tech landscape. The company's commitment to quality and customer satisfaction fosters brand loyalty, while its impressive track record of cash flow generation supports sustainable dividends—a significant draw for income-focused investors. By focusing on long-term value creation rather than short-term gains, Garmin aligns itself with investment philosophies akin to those of Warren Buffett and Charlie Munger, which favor companies with durable competitive advantages and clear pathways to growth. With global expansion and the rising demand for IoT and smart devices, Garmin's future remains bright, making it an intriguing consideration for potential investors seeking a blend of stability and growth.
Garmin Ltd. operates through several core business segments, each focusing on different markets and product categories. The primary segments include:
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Aviation: This segment provides navigation and communication products for both general and commercial aviation. Garmin's aviation products include cockpit displays, navigation systems, and flight management systems, catering to private pilots, business jets, and commercial airlines.
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Automotive: Garmin offers navigation and infotainment solutions for the automotive industry. This includes portable GPS devices, integrated navigation systems for vehicles, and software services that enhance driving experience, such as traffic updates, route planning, and connected services.
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Fitness: A significant focus for Garmin, this segment encompasses wearable technology and accessories tailored for health and fitness enthusiasts. Products include GPS watches, heart rate monitors, cycling computers, and other fitness tracking devices that cater to runners, cyclists, swimmers, and outdoor adventurers.
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Marine: Garmin's marine segment provides a range of products for boaters and fishermen, including chartplotters, sonar devices, VHF radios, and marine instruments. These products serve both recreational and commercial maritime markets, facilitating navigation and communication at sea.
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Outdoor: This segment includes products designed for outdoor enthusiasts, such as handheld GPS devices, inReach satellite communicators, and other outdoor accessories. It caters to hikers, campers, and adventurers, focusing on ruggedness and portable navigation.
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Wearable Technology: Beyond fitness, this segment encompasses smartwatches and other wearable devices that incorporate health tracking features, GPS, and smart notifications, appealing to a broader consumer base interested in lifestyle and wellness.
By diversifying its offerings across these segments, Garmin has established a robust market presence and clientele, leveraging its technology and innovation capabilities to address the specific needs and preferences of various user groups.
Garmin Ltd. possesses several unique competitive advantages over its rivals in the GPS and wearable technology markets. Here are some key aspects:
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Brand Reputation: Garmin has established a strong and trustworthy brand in the GPS and navigation space. Their long-standing presence in the market has fostered consumer loyalty.
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Diverse Product Portfolio: Garmin offers a wide range of products across various segments, including aviation, marine, automotive, outdoor, fitness, and healthcare. This diversification mitigates risks and allows them to cater to multiple customer demographics.
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Innovation and R&D Investment: Garmin places a strong emphasis on research and development, allowing them to continuously innovate and improve their products. Their ability to integrate cutting-edge technology, such as advanced sensors and IoT capability, keeps them ahead of competitors.
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Vertical Integration: Garmin designs and manufactures many of its components, which allows them greater control over quality, cost, and delivery timelines compared to competitors that rely heavily on third-party suppliers.
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Strong Distribution Network: Garmin has built a robust distribution network that includes partnerships with major retailers and online platforms, ensuring widespread availability of its products.
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User-Friendly Software Ecosystem: Garmin’s software, including the Connect app, offers a strong user experience that complements their hardware products. Their ecosystem facilitates community building and enhances consumer engagement.
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Niche Market Expertise: Garmin's deep knowledge and experience in niches like aviation and marine navigation provide them with a competitive edge, as these markets require specialized products that others may not effectively cater to.
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Durability and Quality: Garmin products are known for their durability and reliability, which adds to customer satisfaction and repeat purchases, especially in outdoor and sport-related categories.
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Global Presence: Garmin has established a significant international footprint, allowing them to tap into emerging markets and diversify their revenue sources.
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Strong Financial Position: With solid revenue generation and profitability, Garmin has the financial flexibility to invest in new technologies, markets, and acquisitions as needed.
These competitive advantages enable Garmin to maintain its leadership position in the market and effectively fend off competition from other players within the GPS and wearable sectors.
Garmin Ltd, a prominent player in the GPS technology and wearables market, faces several risks and challenges in the near future:
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Market Competition: The technology sector, particularly in wearables and GPS devices, is highly competitive. Companies like Apple, Fitbit, and other tech giants are continuously innovating, which can threaten Garmin's market share.
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Technological Obsolescence: Rapid advancements in technology mean that products can quickly become outdated. Garmin needs to consistently invest in R&D to keep up with innovative features and capabilities that consumers demand.
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Supply Chain Disruptions: Global supply chain issues, exacerbated by the COVID-19 pandemic, can affect Garmin’s ability to source components efficiently. Any delays or shortages in the supply chain can impact product availability and sales.
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Economic Conditions: Economic downturns or fluctuations can adversely affect consumer spending on non-essential items, including Garmin's products. A recession may lead to decreased sales, especially in discretionary categories like fitness and outdoor devices.
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Regulatory Challenges: As Garmin operates in multiple countries, it faces a plethora of regulations related to data privacy, electronic devices, and consumer protections. Changes in laws or regulations can pose challenges for compliance and operational costs.
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Cybersecurity Threats: As products become more connected and reliant on software, the risk of cyber threats increases. Any major security breach or data leak can damage Garmin's reputation and customer trust.
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Dependency on Third-party Vendors: Garmin relies on third-party vendors for certain components and services. Any disruptions or poor performance from these vendors may impact operational efficiency and product quality.
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Product Lifecycle Management: Garmin must effectively manage the introduction and phase-out of products to avoid excess inventory or obsolete stock, which can adversely affect financial performance.
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Global Market Dynamics: Fluctuating exchange rates and geopolitical tensions can impact Garmin's international operations and profitability, especially if they have significant exposure in certain regions.
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Environmental and Sustainability Issues: As consumers become more environmentally conscious, Garmin may face pressure to ensure sustainable practices in manufacturing and product lifecycle management.
Addressing these risks requires strategic navigation, constant innovation, and an agile business model to adapt to changing market conditions.
Revenue & Expenses Breakdown
Garmin Ltd
Balance Sheet Decomposition
Garmin Ltd
Current Assets | 4.7B |
Cash & Short-Term Investments | 2.2B |
Receivables | 808.4m |
Other Current Assets | 1.7B |
Non-Current Assets | 4.2B |
Long-Term Investments | 1.2B |
PP&E | 1.3B |
Intangibles | 768m |
Other Non-Current Assets | 889.6m |
Current Liabilities | 1.6B |
Accounts Payable | 331.9m |
Accrued Liabilities | 517.1m |
Other Current Liabilities | 775.3m |
Non-Current Liabilities | 254m |
Other Non-Current Liabilities | 254m |
Earnings Waterfall
Garmin Ltd
Revenue
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5.6B
USD
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Cost of Revenue
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-2.4B
USD
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Gross Profit
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3.3B
USD
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Operating Expenses
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-2B
USD
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Operating Income
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1.3B
USD
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Other Expenses
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124.6m
USD
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Net Income
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1.4B
USD
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Free Cash Flow Analysis
Garmin Ltd
USD | |
Free Cash Flow | USD |
Garmin delivered an outstanding Q2 with a 14% increase in revenue to $1.51 billion and a 20% rise in operating income to $342 million. Gross margin was 57.3%, and operating margin was 22.7%. Pro forma EPS grew by 9% to $1.58. The Fitness segment led with a 28% revenue boost, while the Outdoor segment saw a slight decline. Garmin has raised its full-year revenue guidance to $5.95 billion and anticipates an EPS of $6. They also expect gross and operating margins of 57% and 21.3% respectively .
What is Earnings Call?
GRMN Profitability Score
Profitability Due Diligence
Garmin Ltd's profitability score is 64/100. The higher the profitability score, the more profitable the company is.
Score
Garmin Ltd's profitability score is 64/100. The higher the profitability score, the more profitable the company is.
GRMN Solvency Score
Solvency Due Diligence
Garmin Ltd's solvency score is 78/100. The higher the solvency score, the more solvent the company is.
Score
Garmin Ltd's solvency score is 78/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
GRMN Price Targets Summary
Garmin Ltd
According to Wall Street analysts, the average 1-year price target for GRMN is 151.25 USD with a low forecast of 119.18 USD and a high forecast of 190.05 USD.
Shareholder Yield
Current shareholder yield for GRMN is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
GRMN Price
Garmin Ltd
Average Annual Return | 6.91% |
Standard Deviation of Annual Returns | 23.49% |
Max Drawdown | -38% |
Market Capitalization | 34.6B USD |
Shares Outstanding | 192 698 000 |
Percentage of Shares Shorted | 1.65% |
Ownership
GRMN Insider Trading
Buy and sell transactions by insiders
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Profile
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Dividend Yield
Description
Garmin Ltd. is a holding company, which engages in the provision of navigation, communications and information devices, most of which are enabled by Global Positioning System (GPS) technology. The company is headquartered in Schaffhausen, Schaffhausen and currently employs 18,700 full-time employees. The company went IPO on 2000-12-08. The firm operates through five segments. The company offers a range of auto navigation products, as well as a range of products and applications designed for the mobile GPS market. The company offers products to consumers around the world, including Outdoor Handhelds, Wearable Devices, Golf Devices, and Dog Tracking and Training/Pet Obedience Devices. The company offers a range of products designed for use in fitness and activity tracking. Garmin offers a range of products designed for use in fitness and activity tracking. Its aviation business segment is a provider of solutions to aircraft manufacturers, existing aircraft owners and operators, as well as military and government customers and serves a range of aircraft, including transport aircraft, business aviation, general aviation, experimental/light sport, helicopters, optionally piloted vehicles and unmanned aerial vehicles.
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IPO
Employees
Officers
The intrinsic value of one GRMN stock under the Base Case scenario is 116.42 USD.
Compared to the current market price of 180.17 USD, Garmin Ltd is Overvalued by 35%.