What Is Garmin Ltd.'s (NASDAQ:GRMN) Share Price Doing?
Let's talk about the popular Garmin Ltd. (NASDAQ:GRMN). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$132 at one point, and dropping to the lows of US$115. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Garmin's current trading price of US$126 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Garmin’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Garmin
What's the opportunity in Garmin?
According to my valuation model, Garmin seems to be fairly priced at around 13.24% above my intrinsic value, which means if you buy Garmin today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $111.01, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Garmin’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Garmin?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Garmin's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? GRMN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on GRMN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 2 warning signs with Garmin, and understanding these should be part of your investment process.
If you are no longer interested in Garmin, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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