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Garmin Boosts Ties with DPCA, Expands IDVR Technology

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Navigation and communications equipment provider Garmin Ltd. (GRMN - Free Report) yesterday announced that it will provide its intelligent driving video recorder (IDVR) technology to Dongfeng Peugeot-Citroën Automobile Limited’s (DPCA) recently unveiled Dongfeng Citroën C4L car model.

For the last one year, the stock has outperformed the Zacks Electronics - Miscellaneous Products industry. It has returned 31.77% compared with the industry’s return of 26.30%.

Garmin and DPCA

The move is an extension of Garmin’s ongoing strategic partnership with DPCA that it plans to take forward in a robust manner.

The IDVR technology records road footage in high-quality 1080p/30fps and relays driver assistance systems (ADAS) like lane departure and forward collision warnings. It arrives factory-installed and fully integrated on the top of DPCA vehicles’ interior, behind the driving rearview mirror.

A microSD card inside the IDVR compartment keeps the recorded footage, which, when viewed, displays detailed information such as date/time, speed and turning signal information.

Garmin has long been in a strategic partnership with DPCA. The company first launched the IDVR technology in Peugeot 3008 car model. The expansion plan includes pre-installation of Garmin IDVR in Dongfeng Citroën and Dongfeng Peugeot vehicle models.

Our Take

The move appears to be a part of Garmin’s efforts to boost its Auto/Mobile segment that offers personal navigation devices (PNDs), infotainment solutions and mobile applications.

In the third quarter, this segment was down 12.7% sequentially and 18.9% on a year-over-year basis. The year-over-year decrease was due to the shrinking of the PND market and headwinds caused by additional revenue deferrals. (Read more: Garmin Q3 Earnings & Revenues Beat Expectations)

GARMIN LTD Net Income (TTM)

Despite significant reductions over a number of years, Garmin’s PND business remains a big part of its business. However, the secular decline in this business offsets, at times almost entirely, the growth in its other segments. Management has shifted focus to in-dash solutions where revenues are necessarily deferred in some cases. This adds to the weakness caused by the cannibalization of this market by smartphones.

Further, management was late to grasp the changing trends, which increased competition in the space. This was disappointing given the leadership position it has always enjoyed in the PND market. Management expects the PND market to continue to decline this year, which will naturally remain a drag on the company’s business.

Zacks Rank and Stocks to Consider

Currently, Garmin is a Zacks Rank #3 (Hold) stock. Stocks worth considering in the broader technology sector include Daktronics Inc. (DAKT - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Control4 Corporation , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

For the current year, the consensus estimate for Daktronics has gone up by 45.5% in the past 60 days. Estimates for NVIDIA and Control4 have gone up by 30.6% and 7.3%, respectively over the same time frame. 

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