Garmin's (GRMN) Q3 Earnings & Sales Beat Estimates, Up Y/Y
Garmin Ltd. GRMN reported third-quarter 2023 adjusted earnings of $1.41 per share, beating the Zacks Consensus Estimate by 9.3%. The bottom line improved 14% on a year-over-year basis.
Net sales were $1.28 billion, which surpassed the Zacks Consensus Estimate by 5.81%. The figure increased 12% from the year-ago quarter’s figure.
The year-over-year growth in the top line was attributed to strength in the Fitness and Auto OEM segments. The growing Aviation and Outdoor segments contributed well.
However, GRMN witnessed weak momentum in the Marine segment in the third 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 (34% of net sales): The segment generated sales of $433.99 million in the reported quarter, increasing 7% year over year due to strong demand in adventure watches.
Fitness (27.6%): The segment generated sales of $352.98 million, which increased 26% from the year-ago quarter’s level, owing to solid demand for the company’s advanced wearables.
Aviation (15.5%): The segment generated sales of $198.16 million, increasing 5% on a year-over-year basis. This was driven by solid momentum in OEM categories.
Marine (14.3%): Garmin generated sales of $182.25 million from the segment, decreasing 7% on a year-over-year basis. This was attributed to the unfavorable timing of promotions.
Auto OEM (8.6%): The segment generated sales of $110.15 million, up 59% from the prior-year quarter’s level. The growing shipment of domain controllers contributed well.
Operating Results
In the third quarter, the gross margin was 57%, which contracted 180 basis points (bps) from the year-ago period’s level.
Garmin’s operating expenses of $458.2 million were up 6% from the prior-year quarter’s level. As a percentage of revenues, the figure contracted 190 bps year over year to 35.9%.
The operating margin was 21.2% in the reported quarter, which contracted 20 bps year over year.
Balance Sheet & Cash Flow
As of Oct 1, 2023, cash, cash equivalents and marketable securities were $1.7 billion, up from $1.68 billion as of Jul 1, 2023.
The company generated a free cash flow of $312 million.
Garmin paid out dividends worth $140 million and repurchased shares worth $9 million in the reported quarter.
2023 Guidance
GRMN raised its guidance for 2023 revenues from $5.05 billion to $5.15 billion. The Zacks Consensus Estimate for 2023 net sales is pegged at $5.05 billion.
The company expects pro-forma earnings of $5.25 per share. The consensus mark for 2023 earnings is pegged at $5.16 per share.
Zacks Rank and Stocks to Consider
Currently, Garmin has a Zacks Rank #4 (Sell).
Here are some better-ranked stocks worth considering in the broader sector.
GoDaddy GDDY, Ballard Power System BLDP and Itron ITRI are some better-ranked stocks that investors can consider in the broader sector. While GDDY and ITRI sport a Zacks Rank #1 (Strong Buy), BLDP carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GoDaddy shares have declined 2% year to date. GoDaddy is scheduled to release third-quarter 2023 results on Nov 2.
Itron shares have increased 13.5% year to date. ITRI is set to report its third-quarter 2023 results on Nov 2.
Ballard Power System shares have declined 31.3% year to date. BLDP is set to report its third-quarter 2023 results on Nov 7.
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