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TheStreet Open House

Why Garmin (GRMN) Stock Is Declining In Pre-Market Trading Today

NEW YORK (TheStreet) -- Garmin (GRMN) shares are down -0.8% to $57 on Wednesday after analysts at R.W. Baird initiated coverage on the stock with a "neutral" rating and $59 price target.

The GPS navigation, communication and services device manufacturer fell -0.4% to $57.46 on weak volume in trading Tuesday.

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TheStreet Ratings team rates GARMIN LTD as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate GARMIN LTD (GRMN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 11.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. To add to this, GRMN has a quick ratio of 1.95, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 42.50% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GRMN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for GARMIN LTD is rather high; currently it is at 58.69%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.39% significantly outperformed against the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Household Durables industry average. The net income increased by 5.5% when compared to the same quarter one year prior, going from $172.49 million to $181.98 million.
  • You can view the full analysis from the report here: GRMN Ratings Report

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