For Immediate Release
Chicago, IL – December 12, 2019 – Zacks Equity Research Garmin (GRMN - Free Report) as the Bull of the Day, Movado Group (MOV - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tesla (TSLA - Free Report) .
Here is a synopsis of all three stocks:
Bull of the Day:
Well-known for its GPS devices, Garmin is a company that designs and builds navigation and communication devices that help users map routes in a car, on foot, in a boat, and in a plane.
Blowout Q3 Earnings
Garmin’s Q3 results continued to show healthy growth across its businesses, and is on track to record its third consecutive year of accelerating sales growth.
Revenue of $934 million jumped 15% year-over-year; its aviation, fitness, outdoor, and marine segments collectively increased 24% compared to the prior year thanks to increasing popularity of the respective products. Adjusted EPS surged 27% to $1.27 per share, easily beating the Zacks Consensus Estimate of 94 cents.
Gross margin expanded to 60.7%, while operating margin hit 28% in the third quarter.
Garmin also unveiled its Autoland system for general aviation; the system will help land small aircraft, without pilot assistance, in the event of an emergency.
Overall, CEO Cliff Pemble attributed the company’s successful quarter to “our lineup of great products in every market segment.”
GRMN on the Rise
Shares of GRMN are up over 53% since January compared to the S&P 500’s return of about 28%. Earnings estimates have been rising too, and Garmin is a Zacks Rank #1 (Strong Buy) pick right now.
For the current fiscal year, four analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 26 cents from $3.90 to $4.16; earnings could see about 12.75% growth compared to the prior year period. 2020 looks pretty strong too, with earnings and revenue expected to continue positive year-over-year growth.
GRMN currently trades around 22X its forward full-year earnings estimates, slightly above the broader Computer and Technology Market (21.3X).
Garmin is one of the few tech stocks that has embraced diversification, as well as successfully moved away from risky business segments like its auto GPS devices. The company upped its 2019 outlook back in October, and looks to meet those targets thanks to positive expectations for this holiday season. If you’re an investor searching for a broader tech stock to add to your portfolio, make sure to keep GRMN on your shortlist.
Bear of the Day:
Headquartered in Paramus, NJ, Movado Group is one of the world’s premier watchmakers, designing, manufacturing, and distributing high-end timepieces and fashion watches. Its brand portfolio includes Coach, Tommy Hilfiger, Hugo Boss, Concord, and Movado.
Shares Slump on Underwhelming Q3 Earnings
Non-GAAP earnings came in at 82 cents per share, well below our consensus estimate of $1.03. Revenue fell 1.6% year-over-year to $205.6 million; analysts expected sales of $220 million.
Movado’s Q3 performance was hurt by declining sales and increasing marketing investments, and lowered its full-year revenue outlook as a result.
Analysts have turned bearish on Movado, with one cutting estimates in the last 60 days for fiscal 2019.
Earnings are expected to see double-digit negative growth for the year, and the Zacks Consensus Estimate has dropped 64 cents for that same time period from $2.27 to $1.63 per share.This sentiment has stretched into 2021, though sales growth is expected to be positive.
MOV is now a Zacks Rank #5 (Strong Sell).
Shares of the watchmaker are down almost 36% since January, and the stock took a major hit after its Q3 earnings release; MOV plunged 24.6% in the wake of the report. The S&P 500 is up about 28% this year in comparison.
Movado has been impacted by currency headwinds and the underperforming watch category and overall retail environment. It now expects fiscal 2020 revenue to fall between $690 million to $700 million compared to the previous range of $725 million and $740 million.
The Year Tesla (TSLA - Free Report) Finally Met Its Management Goals
Tesla is the most volatile stock on the market due to an overzealous CEO and a management team that over-promises and under-delivers. This year may be the first year that the company finally meets its lofty goals.
TSLA slid hard at the beginning of 2019 due to liquidity concerns as the company was quickly running out of money and not turning a profit. These concerns were alleviated with debt and equity offering raising over $2 billion. The record number of deliveries in Q2 of 95,000 units kept the rally going into its Q2 earnings. Q2 results missed on both top and bottom-line metrics, and these shares upward trajectory stalled only to be reignited by another record number of deliveries in Q3 and a massive EPS beat.
Overenthusiastic CEO Elon Musk may actually hit the 360,000-400,000 unit target that he set for his company earlier in the year.
Gigafactory 3 in Shanghai is ahead of schedule with cars appearing to be already out for delivery. This is another example of Tesla management hitting their lofty 2019 goals, once again surprising investors.
This Chinese factory will allow them to bypass tariffs and gives them access to the largest EV market on the planet. In phase 1 the firm wants to produce 250,000 annually in Gigafactory 3 and eventually reaching its 500,000 unit capacity. I don’t expect the 250,000 unit goal to be reached for a few years. A fourth European factory is expected to be announced by the end of the year, which would further demonstrate Tesla’s EV world dominance plans. Still concerns about steep competition and global economic slowdown loom.
Cyber truck is the latest news coming out of Tesla, and critics had a field day when they first saw this vehicle. Critics are calling it a stencil drawn by a child, or something straight out of an 80s Sci-Fi movie. These critics were quickly silenced with 200,000 customer pre-orders within the first 48 hours of its announcement. The car will have a battery range of 500 miles, the longest on the consumer markets. This EV will start at $39,900 and expect to see these on the streets by 2021.
The company is finally meeting management’s excessive goals, and the share price is beginning to reap the benefits as the short-seller slowly exit their positions. This stock still has upside potential with the ahead of schedule Gigafactory 3 in Shanghai being a significant catalyst.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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