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Garmin Ltd. (NASDAQ:GRMN) Finds Its Way Home Again

Garmin Ltd. (NASDAQ:GRMN) has been an interesting story of what we might call “improbable relative success”. Recall that this company used to be basically just a thing attached to the windshield.

Turning to the company’s Q3 report, the company reported Q3 (Sep) earnings of $1.00 per share, excluding non-recurring items, $0.23 better than the S&P Capital IQ Consensus of $0.77; revenues rose 7.8% year/year to $810.0 mln vs the $784.1 mln S&P Capital IQ Consensus. The company also issued guidance for FY18, sees EPS of approx $3.45, excluding non-recurring items, vs. $3.31 S&P Capital IQ Consensus and vs prior guidance of approx $3.30; reaffirms FY18 revs of approx $3.30 bln vs. $3.30 bln S&P Capital IQ Consensus.

Garmin Ltd. (NASDAQ:GRMN) trumpets itself as a company that designs, develops, manufactures, markets, and distributes a range of navigation, communication, and information devices worldwide.

You know it as that thing that you use your phone for now. But there’s a lot more going on here.

It operates through five segments: Auto, Aviation, Marine, Outdoor, and Fitness. The Auto segment offers personal navigation devices; infotainment systems; and action cameras, as well as mobile applications under the Garmin and NAVIGON names.

The Aviation segment provides navigation, communication, flight control, hazard avoidance, weather radar, radar altimeter, datalink weather, in-cockpit and cloud connectivity, voice controls, and other products and services; wearables, portables, apps, training, simulation, and aviation data services; and traffic collision avoidance, engine information, and terrain awareness and warning systems.

This segment also offers controller-pilot data link, a suite of automatic dependent surveillance broadcast solutions. The Marine segment provides chartplotters and multi-function displays, Cartography Products, fish finders, sounders, autopilot systems, radars, compliant instrument displays, VHF communication radios, handhelds and wearable devices, sailing products, and entertainment products.

The Outdoor segment offers outdoor handhelds, wearable devices, golf devices, and dog tracking and training/pet obedience devices. The Fitness segment provides running/multi-sport watches, cycling computers, cycling power meters, cycling safety and awareness products, and Connect IQ and activity tracking devices, as well as Garmin Connect and Garmin Connect Mobile, which are Web and mobile platforms for users to track and analyze their fitness and wellness data.

The company sells its global positioning system receivers and accessories to retail outlets; and aviation products to aviation dealers and aircraft manufacturers through a network of independent dealers and distributors.

 

Stand and Cheer

As we discussed above, GRMN just announced a strong quarter, continuing its momentum of surprising performance.

Dougherty notes “Garmin has a nicely diversified business with enviable margins and market share, along with a history of operational excellence. The stock is currently trading 3x EV/S on their new FY19 revenue estimate of $3.4B. Generally speaking, they have a more positive than negative bias on shares as this is inexpensive relative to peers with similar margins and would look to be more constructive as gain confidence in the new product pipeline into next year.”

This announcement has popped the stock higher, which certainly isn’t surprising. GRMN shareholders are now sitting on about 7% in gains over the past week.

“During the third quarter, we continued our strong performance achieving double-digit revenue growth in four of our five segments and double-digit growth of consolidated operating income,” said Cliff Pemble, president and chief executive officer of Garmin Ltd. “We are well positioned for the remainder of 2018 with a solid lineup of products and are raising our EPS guidance to reflect our strong performance.

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