We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Garmin's (GRMN) Q2 Earnings & Sales Beat Estimates, Up Y/Y
Read MoreHide Full Article
Garmin Ltd. (GRMN - Free Report) reported second-quarter 2023 pro-forma earnings of $1.45 per share, beating the Zacks Consensus Estimate by 1.4%. The bottom line improved by 1% on a year-over-year basis.
Net sales were $1.32 billion, which surpassed the Zacks Consensus Estimate of $1.28 billion. The figure increased by 6% from the year-ago quarter’s figure.
The year-over-year growth in the top line was attributed to strength in Fitness and Auto OEM segments. The growing Aviation segment contributed well.
However, GRMN witnessed weak momentum in the Outdoor and Marine segments in the second quarter.
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.
Outdoor (33.9% of net sales): The segment generated sales of $448.1 million in the reported quarter, decreasing 3% year over year due to sluggishness in multiple product categories. Nevertheless, the company witnessed growth in adventure watches.
Fitness (25.4%): The segment generated sales of $334.9 million, which increased 23% from the year-ago quarter’s level, owing to solid demand for the company’s advanced wearables.
Aviation (16.4%): The segment generated sales of $217.4 million, increasing 6% on a year-over-year basis. This was driven by solid momentum in OEM categories.
Marine (16.3%): Garmin generated sales of $215.8 million from the segment, decreasing 11% on a year-over-year basis. This was attributed to the unfavorable timing of promotions.
Auto OEM (8%): The segment generated sales of $104.6 million, up 77% from the prior-year quarter’s level. The growing shipment of domain controllers contributed well.
Operating Results
In the second quarter, the gross margin was 57.5%, which contracted 120 basis points (bps) from the year-ago period’s level.
Garmin’s operating expenses of $475.1 million were up 8.9% from the prior-year quarter’s level. As a percentage of revenues, the figure expanded 80 bps year over year to 35.9%.
The operating margin was 21.5% in the reported quarter, which contracted 210 bps year over year.
Balance Sheet & Cash Flow
As of Jul 1, 2023, cash, cash equivalents and marketable securities were $1.68 billion, up from $1.55 billion as of Apr 1, 2023.
In the second quarter, inventories were $1.4 billion compared with $1.5 billion in the previous quarter. We note that GRMN had no long-term debt for the reported quarter.
GRMN generated $273.7 million in cash from operations in the reported quarter compared with $279.2 million in the previous quarter.
The company generated a free cash flow of $221.2 million.
Garmin paid out dividends worth $140 million and repurchased shares worth $26 million in the reported quarter.
2023 Guidance
GRMN raised its guidance for 2023 revenues from $5 billion to $5.05 billion. The Zacks Consensus Estimate for 2023 net sales is pegged at $5.07 billion.
The company expects pro-forma earnings of $5.15 per share. The consensus mark for 2023 earnings is pegged at $5.24 per share.
Zacks Rank and Stocks to Consider
Currently, Garmin carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , AvidXchange (AVDX - Free Report) and Akamai Technologies (AKAM - Free Report) , each carrying a Zacks Rank #2.
Image: Bigstock
Garmin's (GRMN) Q2 Earnings & Sales Beat Estimates, Up Y/Y
Garmin Ltd. (GRMN - Free Report) reported second-quarter 2023 pro-forma earnings of $1.45 per share, beating the Zacks Consensus Estimate by 1.4%. The bottom line improved by 1% on a year-over-year basis.
Net sales were $1.32 billion, which surpassed the Zacks Consensus Estimate of $1.28 billion. The figure increased by 6% from the year-ago quarter’s figure.
The year-over-year growth in the top line was attributed to strength in Fitness and Auto OEM segments. The growing Aviation segment contributed well.
However, GRMN witnessed weak momentum in the Outdoor and Marine segments in the second quarter.
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.
Garmin Ltd. Price, Consensus and EPS Surprise
Garmin Ltd. price-consensus-eps-surprise-chart | Garmin Ltd. Quote
Segmental Details
Outdoor (33.9% of net sales): The segment generated sales of $448.1 million in the reported quarter, decreasing 3% year over year due to sluggishness in multiple product categories. Nevertheless, the company witnessed growth in adventure watches.
Fitness (25.4%): The segment generated sales of $334.9 million, which increased 23% from the year-ago quarter’s level, owing to solid demand for the company’s advanced wearables.
Aviation (16.4%): The segment generated sales of $217.4 million, increasing 6% on a year-over-year basis. This was driven by solid momentum in OEM categories.
Marine (16.3%): Garmin generated sales of $215.8 million from the segment, decreasing 11% on a year-over-year basis. This was attributed to the unfavorable timing of promotions.
Auto OEM (8%): The segment generated sales of $104.6 million, up 77% from the prior-year quarter’s level. The growing shipment of domain controllers contributed well.
Operating Results
In the second quarter, the gross margin was 57.5%, which contracted 120 basis points (bps) from the year-ago period’s level.
Garmin’s operating expenses of $475.1 million were up 8.9% from the prior-year quarter’s level. As a percentage of revenues, the figure expanded 80 bps year over year to 35.9%.
The operating margin was 21.5% in the reported quarter, which contracted 210 bps year over year.
Balance Sheet & Cash Flow
As of Jul 1, 2023, cash, cash equivalents and marketable securities were $1.68 billion, up from $1.55 billion as of Apr 1, 2023.
In the second quarter, inventories were $1.4 billion compared with $1.5 billion in the previous quarter. We note that GRMN had no long-term debt for the reported quarter.
GRMN generated $273.7 million in cash from operations in the reported quarter compared with $279.2 million in the previous quarter.
The company generated a free cash flow of $221.2 million.
Garmin paid out dividends worth $140 million and repurchased shares worth $26 million in the reported quarter.
2023 Guidance
GRMN raised its guidance for 2023 revenues from $5 billion to $5.05 billion. The Zacks Consensus Estimate for 2023 net sales is pegged at $5.07 billion.
The company expects pro-forma earnings of $5.15 per share. The consensus mark for 2023 earnings is pegged at $5.24 per share.
Zacks Rank and Stocks to Consider
Currently, Garmin carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , AvidXchange (AVDX - Free Report) and Akamai Technologies (AKAM - Free Report) , each carrying a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce shares have gained 70.7% in the year-to-date period. The long-term earnings growth rate for CRM is currently projected at 19.25%.
AvidXchange shares have increased 21.1% in the year-to-date period. The long-term earnings growth rate for AVDX is currently projected at 22.90%.
Akamai shares have gained 9.5% in the year-to-date period. The long-term earnings growth rate for AKAM is currently projected at 10%.