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Garmin (GRMN) Surpasses Earnings & Revenue Estimates in Q3
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Garmin Ltd. (GRMN - Free Report) reported better-than-expected results in the third quarter of 2018, with revenues and earnings surpassing the Zacks Consensus Estimate.
Earnings of $1 per share beat the consensus mark of 75 cents. Moreover, earnings were up 1% sequentially and 33.3% year over year.
Management focuses on continued innovation, diversification and market expansion to explore growth opportunities in all its business segments. However, macroeconomic challenges remain part of the operating environment.
We observe that shares of Garmin have gained 5.8% on a year-to-date basis, outperforming the industry’s 11.6% rally.
Let’s delve deeper into the numbers.
Revenues
Garmin’s third-quarter revenues of $810 million beat the Zacks Consensus Estimate of $776 million, decreasing 9.4% sequentially but increasing 7.8% from the prior-year quarter. The year-over-year increase was backed by higher demand across its fitness, outdoor, marine and aviation segments.
Segmental Revenues
Garmin’s Outdoor, Fitness, Marine, Auto/Mobile and Aviation segments generated 26%, 24%, 12%, 20% and 18% of the total revenues, respectively. Seasonality resulted in considerable variations in Garmin’s revenues.
Outdoor revenues were up 3.9% sequentially and 13.2% year over year. The year-over-year increase was mainly driven by robust demand for wearables.
The Fitness segment decreased 15.5% sequentially but increased 13.8% from the year-ago quarter. The year-over-year increase was driven by strength in advanced wearables and cycling.
The Marine segment decreased 26.6% sequentially but increased 27.8% year over year. The year-over-year growth was driven by strength in new products and acquisitions.
The Auto/Mobile segment was down 8.3% sequentially and 16.2% year over year. The decrease was mainly due to shrinking of the personal navigation device (PND) market.
Aviation segment revenues were down 4.3% sequentially but up 17.5% from the prior-year quarter. The increase was mainly driven by new product introductions.
Revenues by Geography
While America generated 46% (down 15.3% sequentially but up 6.9% year over year) of the total revenues, EMEA and APAC contributed 38% (down 0.7% on a sequential basis but up 5.3% on a year-over-year basis) and 16% (down 10.5% sequentially but up 17.1% from the year-ago quarter), respectively.
Operating Results
Gross margin was 59.4%, up 120 basis points from the year-ago quarter. Stronger demand across all its segments led to gross margin expansion on a year-over-year basis.
Operating expenses of $284.8 million were up 7.9% from $263.9 million in the year-ago quarter.
GAAP net income was $184.2 million compared with $151.1 million a year ago.
Balance Sheet
Inventories were up 11% sequentially to $556.6 million. Cash and marketable securities were approximately $1.23 billion compared with $1.12 billion in the last reported quarter. The company has no long-term debt.
At the end of third quarter, the company generated cash flow of $264 million from operating activities and free cash flow of $234 million.
Full-Year Guidance
For full-year 2018, management maintained its revenues expectation at $3.3 billion but increased its pro-forma earnings to $3.45 per share versus earlier projection of $3.30.
The Zacks Consensus Estimate for 2018 revenues and earnings is pegged at $3.31 billion and $3.30 per share, respectively.
Long-term earnings growth rate for boohoo group, IAC/InterActiveCorp and AMETEK is currently pegged at 25%, 15% and 10.97%, respectively.
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Garmin (GRMN) Surpasses Earnings & Revenue Estimates in Q3
Garmin Ltd. (GRMN - Free Report) reported better-than-expected results in the third quarter of 2018, with revenues and earnings surpassing the Zacks Consensus Estimate.
Earnings of $1 per share beat the consensus mark of 75 cents. Moreover, earnings were up 1% sequentially and 33.3% year over year.
Management focuses on continued innovation, diversification and market expansion to explore growth opportunities in all its business segments. However, macroeconomic challenges remain part of the operating environment.
We observe that shares of Garmin have gained 5.8% on a year-to-date basis, outperforming the industry’s 11.6% rally.
Let’s delve deeper into the numbers.
Revenues
Garmin’s third-quarter revenues of $810 million beat the Zacks Consensus Estimate of $776 million, decreasing 9.4% sequentially but increasing 7.8% from the prior-year quarter. The year-over-year increase was backed by higher demand across its fitness, outdoor, marine and aviation segments.
Segmental Revenues
Garmin’s Outdoor, Fitness, Marine, Auto/Mobile and Aviation segments generated 26%, 24%, 12%, 20% and 18% of the total revenues, respectively. Seasonality resulted in considerable variations in Garmin’s revenues.
Outdoor revenues were up 3.9% sequentially and 13.2% year over year. The year-over-year increase was mainly driven by robust demand for wearables.
The Fitness segment decreased 15.5% sequentially but increased 13.8% from the year-ago quarter. The year-over-year increase was driven by strength in advanced wearables and cycling.
The Marine segment decreased 26.6% sequentially but increased 27.8% year over year. The year-over-year growth was driven by strength in new products and acquisitions.
The Auto/Mobile segment was down 8.3% sequentially and 16.2% year over year. The decrease was mainly due to shrinking of the personal navigation device (PND) market.
Aviation segment revenues were down 4.3% sequentially but up 17.5% from the prior-year quarter. The increase was mainly driven by new product introductions.
Revenues by Geography
While America generated 46% (down 15.3% sequentially but up 6.9% year over year) of the total revenues, EMEA and APAC contributed 38% (down 0.7% on a sequential basis but up 5.3% on a year-over-year basis) and 16% (down 10.5% sequentially but up 17.1% from the year-ago quarter), respectively.
Operating Results
Gross margin was 59.4%, up 120 basis points from the year-ago quarter. Stronger demand across all its segments led to gross margin expansion on a year-over-year basis.
Operating expenses of $284.8 million were up 7.9% from $263.9 million in the year-ago quarter.
GAAP net income was $184.2 million compared with $151.1 million a year ago.
Balance Sheet
Inventories were up 11% sequentially to $556.6 million. Cash and marketable securities were approximately $1.23 billion compared with $1.12 billion in the last reported quarter. The company has no long-term debt.
At the end of third quarter, the company generated cash flow of $264 million from operating activities and free cash flow of $234 million.
Full-Year Guidance
For full-year 2018, management maintained its revenues expectation at $3.3 billion but increased its pro-forma earnings to $3.45 per share versus earlier projection of $3.30.
The Zacks Consensus Estimate for 2018 revenues and earnings is pegged at $3.31 billion and $3.30 per share, respectively.
Garmin Ltd. Price, Consensus and EPS Surprise
Garmin Ltd. Price, Consensus and EPS Surprise | Garmin Ltd. Quote
Zacks Rank and Other Stocks to Consider
Currently, Garmin carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include boohoo group plc (BHOOY - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AMETEK, Inc. (AME - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for boohoo group, IAC/InterActiveCorp and AMETEK is currently pegged at 25%, 15% and 10.97%, respectively.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>