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Why Is Garmin (GRMN) Up 9.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Garmin (GRMN - Free Report) . Shares have added about 9.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Garmin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Garmin Q2 Earnings & Sales Beat Estimates
Garmin has reported second-quarter 2021 pro-forma earnings of $1.68 per share, beating the Zacks Consensus Estimate by 36.6%. The bottom line improved 85% on a year-over-year basis.
Net sales were $1.33 billion, which surpassed the Zacks Consensus Estimate of $1.07 million. The figure increased 53% from the year-ago quarter.
Top-line growth was driven by strong performance delivered by the company’s marine, outdoor, auto, aviation and fitness segments.
Garmin’s strong focus on continued innovation, diversification and market expansion to explore opportunities across all business segments remains a major positive. Its strong product lines are expected to aid its performance in the near term.
Segmental Details
Outdoor (24.4% of net sales): The segment generated sales of $323.4 million in the reported quarter, improving 57% year over year. The year-over-year increase was primarily driven by robust demand for Garmin’s adventure watches.
Fitness (31.1%): The segment generated sales of $413.2 million, which increased 40% from the year-ago quarter. This can be primarily attributed to its well-performing advanced wearables and cycling products.
Aviation (13.6%): The segment generated sales of $180.8 million, increasing 43% on a year-over-year basis. This was driven by solid momentum across OEM and aftermarket products.
Marine (19.8%): Garmin generated sales of $261.8 million from the segment, increasing 66% on a year-over-year basis. The company witnessed solid momentum across chartplotters in the reported quarter, which, in turn, drove the segment’s revenues.
Auto (11.1%): The segment generated sales of $147.7 million, up 74% from the prior-year quarter. This was primarily driven by strengthening momentum across consumer auto products and new OEM programs.
Operating Results
In the second quarter, the gross margin was 58.8%, which contracted 50 basis points (bps) from the year-ago period.
The company’s operating expenses of $409.7 million were up 25.3% from the prior-year quarter.However, as a percentage of revenues, the figure contracted 670 bps year over year to 30.9%.
Operating margin of 28% in the reported quarter expanded 630 bps year over year.
Balance Sheet & Cash Flow
As of Jun 26, 2021, cash, cash equivalents and marketable securities were $1.97 billion, higher than $1.94 billion as of Mar 27, 2021.
In the second quarter, inventories were $938.6 million compared with $837.9million in the fourth quarter. We note that the company had no long-term debt for the reported quarter.
It generated $229.7million incash from operations in the reported quarter compared with $368.4 million in the previous quarter.
The company generated free cash flow of $120.03 million.
Garmin paid out dividends worth $117 million to shareholders in the first quarter.
2021 Guidance
The company raised the guidance for net sales from $4.6 billion to $4.9 billion.
Garmin raised the guidance for pro-forma earnings from $5.15 per share to $5.50 per share..
The company has revised the guidance for operating margin upward from 23.5% to 23.8%. The gross margin guidance got revised downward from 59.2% to 58.5%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Garmin has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Garmin has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Garmin (GRMN) Up 9.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Garmin (GRMN - Free Report) . Shares have added about 9.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Garmin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Garmin Q2 Earnings & Sales Beat Estimates
Garmin has reported second-quarter 2021 pro-forma earnings of $1.68 per share, beating the Zacks Consensus Estimate by 36.6%. The bottom line improved 85% on a year-over-year basis.
Net sales were $1.33 billion, which surpassed the Zacks Consensus Estimate of $1.07 million. The figure increased 53% from the year-ago quarter.
Top-line growth was driven by strong performance delivered by the company’s marine, outdoor, auto, aviation and fitness segments.
Garmin’s strong focus on continued innovation, diversification and market expansion to explore opportunities across all business segments remains a major positive. Its strong product lines are expected to aid its performance in the near term.
Segmental Details
Outdoor (24.4% of net sales): The segment generated sales of $323.4 million in the reported quarter, improving 57% year over year. The year-over-year increase was primarily driven by robust demand for Garmin’s adventure watches.
Fitness (31.1%): The segment generated sales of $413.2 million, which increased 40% from the year-ago quarter. This can be primarily attributed to its well-performing advanced wearables and cycling products.
Aviation (13.6%): The segment generated sales of $180.8 million, increasing 43% on a year-over-year basis. This was driven by solid momentum across OEM and aftermarket products.
Marine (19.8%): Garmin generated sales of $261.8 million from the segment, increasing 66% on a year-over-year basis. The company witnessed solid momentum across chartplotters in the reported quarter, which, in turn, drove the segment’s revenues.
Auto (11.1%): The segment generated sales of $147.7 million, up 74% from the prior-year quarter. This was primarily driven by strengthening momentum across consumer auto products and new OEM programs.
Operating Results
In the second quarter, the gross margin was 58.8%, which contracted 50 basis points (bps) from the year-ago period.
The company’s operating expenses of $409.7 million were up 25.3% from the prior-year quarter.However, as a percentage of revenues, the figure contracted 670 bps year over year to 30.9%.
Operating margin of 28% in the reported quarter expanded 630 bps year over year.
Balance Sheet & Cash Flow
As of Jun 26, 2021, cash, cash equivalents and marketable securities were $1.97 billion, higher than $1.94 billion as of Mar 27, 2021.
In the second quarter, inventories were $938.6 million compared with $837.9million in the fourth quarter. We note that the company had no long-term debt for the reported quarter.
It generated $229.7million incash from operations in the reported quarter compared with $368.4 million in the previous quarter.
The company generated free cash flow of $120.03 million.
Garmin paid out dividends worth $117 million to shareholders in the first quarter.
2021 Guidance
The company raised the guidance for net sales from $4.6 billion to $4.9 billion.
Garmin raised the guidance for pro-forma earnings from $5.15 per share to $5.50 per share..
The company has revised the guidance for operating margin upward from 23.5% to 23.8%. The gross margin guidance got revised downward from 59.2% to 58.5%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Garmin has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Garmin has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.