How Smart Investors Look at Garmin (GRMN)

Now trading at a price of $98.79, Garmin has moved -1.1% so far today on a volume of 180,757, compared to its average of 939,804. In contrast, the S&P 500 index moved 0.2%.

Garmin shares moved -24.4% over the last 52 weeks, with a high of $133.79 and a low of $76.37. During this time, the stock lagged the S&P 500 index by -9.6%. As of January 2022, the company's 50-day average price is $92.053. Garmin Ltd. designs, develops, manufactures, markets, and distributes a range of wireless devices in the Americas, the Asia Pacific, Australian Continent, Europe, the Middle East, and Africa. The large-cap Technology company has 18,700 full time employees and is based in Schaffhausen, Switzerland. Garmin has returned a 2.9% dividend yield over the last 12 months.

Sustained EPS Growth with Low Leverage Levels:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $3,758 $4,187 $4,983
Revenue Growth n/a 11.42% 19.02%
Gross Margins 59.4% 59.3% 58.0%
Gross Margins Growth n/a -0.17% -2.19%
Operating Margins 25.2% 25.2% 24.5%
Operating Margins Growth n/a 0.0% -2.78%
Earnings Per Share $4.99 $5.17 $5.61
EPS Growth n/a 3.61% 8.51%
Free Cash Flow (MM) $578 $948 $703
FCF Growth n/a 63.94% -25.85%
Capital Expenditures (MM) -$120 -$187 -$310
Net Debt / EBITDA -0.92 -1.17 -1.01

Garmin Is Currently Fairly Valued:

Compared to the Technology sector's average of 26.5, Garmin has a trailing twelve month P/E ratio of 19.8 and, according to its EPS guidance of 5.49, an expected P/E ratio of 18.0. Garmin's PEG ratio is 5.38 based on its 3.67% average growth rate of historical and projected earnings per share. This suggests that the company's shares are overvalued.

Garmin is undervalued in terms of its assets because its P/B ratio is 3.2 compared to its sector average of 5.57. The company's shares are currently trading 64.2% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 3-year average EPS * book value per share) = √(22.5 * 5.26 * 30.587) = $60.17

Garmin Is the Subject of Mixed Market Indicators:

The company has a very low short interest since 1.4% of the company's shares are tied to short positions. Institutions own 55.5% of Garmin's shares, while the insider ownership rate stands at 19.91%. The biggest shareholder is the Vanguard Group, Inc. with a 9% stake in the company worth approximately $1,757,652,333.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.