Earnings Preview: Garmin Ltd. (NASDAQ:GRMN)
Thursday, February 18, 2022 10:44 AM

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Garmin Ltd (GRMN), one of the global leaders in the general aviation and consumer GPS markets, is scheduled to report Q4 2009 on Wednesday, February 24, 2010. In the last two quarters ended September 2009, the company's earnings exceeded the analysts' consensus estimates by high double digit margins. However, in Mar 2009, and December 2008 quarters, the company's earnings fell short of the analysts' consensus estimates by significantly.

Garmin designs, develops, manufactures and markets a diverse family of hand-held, portable and fixed-mount GPS-enabled products and other navigation, communications and information products for the automotive/mobile, outdoor/fitness, marine and general aviation markets. The company operates in four segments: Marine, Automotive/Mobile, Outdoor/Fitness, and Aviation.

In the third quarter of 2009, the company saw steady sequential improvement saw steady sequential improvement in its consumer segments and so was able to return to year-over-year earnings per share growth in the quarter.  While revenues fell year-over-year, the rate of decline moderated at 10% but its margin improvements more than offset that decline.  The automotive/mobile segment's sequential improvement in pricing and margins in the quarter was largely driven by the delivery of new 1200, 1300 and 1400 nüvi series.  The outdoor/fitness segment again showed its strength, posting year-over-year revenue growth of 11% with strong gross and operating margins.  Newest outdoor and fitness products including the Dakota™ line of handhelds in the outdoor market, and the Forerunner® line of fitness products, drove the strong third quarter results.  The aviation segment posted a third straight quarter of significant decline as the segment continues to be affected by a difficult economic environment.  I do not anticipate growth until overall market conditions show consistent stabilization. The marine segment posted third quarter revenue growth of 3% over Q3-2008.  

Analysts' estimates for Q4 2009 range from a low of $0.79 to a high of $1.17, compared to a consensus estimate of $0.941. The consensus EPS forecast has remained the same over the past week at $0.941 and increased over the past month from $0.929 to $0.941 (1.29%). Of the 18 analysts making quarterly forecasts, 3 raised and 1 lowered their forecast.

Garmins near term prospects look bright but the same can't be said about its long term prospects as GPS technology is increasingly becoming available for free as a feature on hugely popular smart phones.

The stock closed Wednesday at $33.02, compared to the 52 week range of $15.02 and $39.65. In the last one year the share price has gained more than 68.2%. The company's earnings may support a stock price in excess of $35 by end 2010.

 

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