Garmin Projects Earnings Growth Amid Stock Price Decline

Garmin is set to report earnings of $1.45 per share with expected revenue growth, despite recent stock struggles. Analysts show optimism but the company's valuation appears high compared to its industry peers, impacting investor sentiment.

Date: 19-09-2024

AI Rating: 6

Garmin (GRMN) is currently experiencing a decline in stock price with a recent trading session drop of -1%. This poor performance is evident as Garmin's shares have decreased by 2.78% over the past month, underperforming compared to the broader market and the tech sector.

However, upcoming earnings are projected to be a focal point for investors. The expected earnings of $1.45 per share would indicate a year-over-year growth of 2.84%. Additionally, revenue projections stand at $1.43 billion with a year-over-year growth of 12.14%. This could signal a potential rebound in stock price, contingent on performance expectations being met.

For the full year, the estimates for Garmin suggest a projected earnings per share of $6.05 and revenue of $5.97 billion, indicating impressive annual growth rates of 8.23% for EPS and 14.11% for revenue. Such positive earnings data might foster investor interest, provided the company can meet these estimates.

Investor sentiment may also be influenced by the company's current Zacks Rank of #3 (Hold), as it reflects a neutral outlook from analysts. Despite this, positive alterations in estimates often correlate with investor optimism and may impact Garmin’s stock performance moving forward.

In terms of valuation, the company has a Forward P/E ratio of 28.36, which is noticeably above the industry average of 17.98. This suggests that Garmin's shares may be trading at a premium, potentially putting pressure on growth expectations. Furthermore, the PEG ratio of 2.97 indicates that while earnings growth is anticipated, the stock price carries a higher risk if growth does not materialize as expected.

The Electronics - Miscellaneous Products industry, which Garmin belongs to, holds an average PEG ratio of 2.14, reinforcing that Garmin stands at a relatively higher valuation.

Stocks: GRMN