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Garmin (GRMN) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

Garmin Ltd. GRMN is scheduled to report fourth-quarter 2018 results on Feb 20.

The company topped the Zacks Consensus Estimate in all the trailing four quarters, recording average of 18.47%.

In the last reported quarter, Garmin delivered a positive earnings surprise of 33.33%. Earnings of $1 per share were up 1% sequentially and 33.3% year over year.

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.

Increasing demand across the company’s fitness, outdoor, marine and aviation segments drove top-line growth in the third quarter.

For full-year 2018, management maintained its revenue guidance at $3.3 billion but increased pro-forma earnings expectation 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 $3.47 per share, respectively.

We observe that shares of Garmin have gained 9.8% in the past year against its industry’s decline of 3.9%.

Let’s see how things are shaping up for the to-be-reported quarter.

Portfolio Strength – A Key Catalyst

Product portfolio expansion remains the top priority for Garmin. The company has been following a strategy of product introductions, acquisitions and strategic partnerships in this regard.

In sync with this strategy, the company is focusing on building a community of users. This will ensure increased engagement with its products, which will continue to drive top-line growth and aid market share.

The company operates in five organized segments — Outdoor, Fitness, Marine, Auto/Mobile and Aviation. A solid portfolio is expected to have aided the company’s performance across all the segments in the fourth quarter.

The Outdoor segment remains a significant growth driver. Currently, Garmin is witnessing notable success in this segment on the back of new technologies and increasing demand for wearables on a worldwide basis.

The company unveiled a new GPS golf device — Approach G80 — to help golfers improve their game. This new device will further expand its outdoor portfolio.

In addition, it unveiled GTR 200B, a communication radio and Bluetooth-equipped intercom for experimental aircraft. The new device is expected to reduce pilots' workload in the cockpit and boost the company’s aviation business.

Garmin’s expanding portfolio of wearables and strength in cycling are major positives for the fitness segment.

All these factors are expected to drive the company’s top-line growth in the soon-to-be-reported quarter.

However, weak personal navigation device (PND) market remains a headwind for Garmin’s Auto/Mobile segment.

Garmin Ltd. Price and EPS Surprise

 

Garmin Ltd. Price and EPS Surprise | Garmin Ltd. Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Garmin currently holds a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult.

Stocks That Warrant a Look

Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Frontline Ltd. FRO has an Earnings ESP of +4.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. SQ has an Earnings ESP of +5.95% and a Zacks Rank #2.

Gogo Inc. GOGO has an Earnings ESP of +9.46% and a Zacks Rank #3.

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