Garmin, Ltd. (GRMN)
by Zacks Equity ResearchNovember 22, 2011 | Comments : 0 Recommended this article: (0)
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We are buyers of the shares at the current valuation, since we believe that Garmin has the position and financial muscle to overcome the fierce competition, pricing pressure and PND cannibalization by smartphones. Garmin's current trailing 12-month earnings multiple is 14.0X, compared to the 16.2X average for the peer group and 17.0X for the S&P 500.
We note that Garmin's expected earnings growth rate of 15.0% over the next 5 years is similar to the 15.5% growth expected of its peers, but significantly higher than the S&P 500, which indicates upside. We therefore have an Outperform rating on Garmin shares and raise our target price to $42 (17.1X 2011 EPS).
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