U.S. Markets closed

Garmin Ltd. (NASDAQ:GRMN): Immense Growth Potential?

Simply Wall St

Based on Garmin Ltd.’s (NASDAQ:GRMN) earnings update on 29 December 2018, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 2.1% in the upcoming year compared with the higher past 5-year average growth rate of 8.0%. By 2020, we can expect Garmin’s bottom line to reach US$709m, a jump from the current trailing-twelve-month of US$694m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Garmin in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Garmin

Can we expect Garmin to keep growing?

The longer term expectations from the 9 analysts of GRMN is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for GRMN, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NasdaqGS:GRMN Past and Future Earnings, March 4th 2019

This results in an annual growth rate of 4.3% based on the most recent earnings level of US$694m to the final forecast of US$803m by 2022. This leads to an EPS of $4.28 in the final year of projections relative to the current EPS of $3.68. Analysts are predicting earnings growth to outpace revenue by the end of 2022, resulting in a margin expansion from 21% to 21%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Garmin, I’ve compiled three essential aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Garmin worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Garmin is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Garmin? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.