Rating Change #9
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.
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Highlights from the ratings report include:
- GRMN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.79, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for GARMIN LTD is rather high; currently it is at 54.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.66% significantly outperformed against the industry average.
- Despite the weak revenue results, GRMN has outperformed against the industry average of 23.4%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Net operating cash flow has significantly decreased to $59.36 million or 51.43% when compared to the same quarter last year. Despite a decrease in cash flow GARMIN LTD is still fairing well by exceeding its industry average cash flow growth rate of -97.15%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Household Durables industry and the overall market on the basis of return on equity, GARMIN LTD has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
Garmin Ltd., together with its subsidiaries, designs, develops, manufactures, and markets global positioning system (GPS) enabled products and other navigation, communication, and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets worldwide. The company has a P/E ratio of 12.7, below the S&P 500 P/E ratio of 17.7. Garmin has a market cap of $6.88 billion and is part of the technology sector and electronics industry. Shares are down 17.3% year to date as of the close of trading on Thursday.
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