Garmin Ltd Valuation – March 2019 #GRMN

Company Profile (excerpt from Reuters): Garmin Ltd. (Garmin), incorporated on February 9, 2010, and subsidiaries offer global positioning system (GPS) navigation and wireless devices and applications. The Company operates through five segments: auto, aviation, fitness, marine and outdoor. The Company designs, develops, manufactures, markets and distributes a family of hand-held, wearable, portable and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GRMN – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $15,869,253,764 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.89 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 30.79% Fail
6. Moderate PEmg Ratio PEmg < 20 24.42 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.83 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.89 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.43
MG Growth Estimate 5.85%
MG Value $69.35
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $49.75
MG Value based on 0% Growth $29.17
Market Implied Growth Rate 7.96%
Current Price $83.81
% of Intrinsic Value 120.86%

Garmin Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.47 in 2015 to an estimated $3.43 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.96% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Garmin Ltd. revealed the company was trading above its Graham Number of $41.91. The company pays a dividend of $2.1 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 24.42, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $7.6.

Garmin Ltd. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $7.60
Graham Number $41.91
PEmg 24.42
Current Ratio 2.89
PB Ratio 3.83
Current Dividend $2.10
Dividend Yield 2.51%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,665,368,000
Total Current Liabilities $921,313,000
Long-Term Debt $0
Total Assets $5,382,858,000
Intangible Assets $417,080,000
Total Liabilities $1,219,884,000
Shares Outstanding (Diluted Average) 190,178,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.54
Dec2018 $3.66
Dec2017 $3.76
Dec2016 $2.73
Dec2015 $2.39
Dec2014 $1.88
Dec2013 $3.12
Dec2012 $2.76
Dec2011 $2.67
Dec2010 $2.95
Dec2009 $3.50
Dec2008 $3.48
Dec2007 $3.89
Dec2006 $2.35
Dec2005 $1.43
Dec2004 $0.95
Dec2003 $0.82
Dec2002 $0.66
Dec2001 $0.53
Dec2000 $0.53
Dec1999 $0.32

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.43
Dec2018 $3.21
Dec2017 $2.92
Dec2016 $2.52
Dec2015 $2.47
Dec2014 $2.56
Dec2013 $2.94
Dec2012 $2.92
Dec2011 $3.10
Dec2010 $3.29
Dec2009 $3.28
Dec2008 $2.92
Dec2007 $2.39
Dec2006 $1.51
Dec2005 $1.01
Dec2004 $0.77
Dec2003 $0.65

Recommended Reading:

Other ModernGraham posts about the company

Garmin Ltd Valuation – June 2018 $GRMN
Garmin Ltd Valuation – March 2017 $GRMN
Garmin Limited Valuation – August 2016 $GRMN
Garmin Ltd Stock Valuation – February 2016 $GRMN
Garmin Limited Analysis – September 2015 Update $GRMN

Other ModernGraham posts about related companies

Hewlett Packard Enterprise Co Valuation – March 2019 #HPE
Fortive Corp Valuation – March 2019 #FTV
Analog Devices Inc Valuation – March 2019 #ADI
IPG Photonics Corp Valuation – March 2019 #IPGP
Micron Technology Inc Valuation – March 2019 #MU
Amphenol Corp Valuation – March 2019 #APH
Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN
Qualcomm Inc Valuation – March 2019 #QCOM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Garmin Ltd Valuation – June 2018 $GRMN

Company Profile (excerpt from Reuters): Garmin Ltd. (Garmin), incorporated on February 9, 2010, and subsidiaries offer global positioning system (GPS) navigation and wireless devices and applications. The Company operates through five segments: auto, aviation, fitness, marine and outdoor. The Company designs, develops, manufactures, markets and distributes a family of hand-held, wearable, portable and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products.

GRMN Chart

GRMN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GRMN – June 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,251,089,671 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.93 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 3.40% Fail
6. Moderate PEmg Ratio PEmg < 20 20.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.93 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.93 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.98
MG Growth Estimate 2.45%
MG Value $39.96
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $43.24
MG Value based on 0% Growth $25.35
Market Implied Growth Rate 6.12%
Current Price $61.85
% of Intrinsic Value 154.79%

Garmin Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.56 in 2014 to an estimated $2.98 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Garmin Ltd. revealed the company was trading above its Graham Number of $37.24. The company pays a dividend of $2.04 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.74, which was below the industry average of 55.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $7.04.

Garmin Ltd. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $7.04
Graham Number $37.24
PEmg 20.74
Current Ratio 3.93
PB Ratio 2.93
Current Dividend $2.04
Dividend Yield 3.30%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $2,191,283,000
Total Current Liabilities $557,843,000
Long-Term Debt $0
Total Assets $4,855,222,000
Intangible Assets $421,006,000
Total Liabilities $858,029,000
Shares Outstanding (Diluted Average) 189,292,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.05
Dec2017 $3.68
Dec2016 $2.70
Dec2015 $2.39
Dec2014 $1.88
Dec2013 $3.12
Dec2012 $2.76
Dec2011 $2.67
Dec2010 $2.95
Dec2009 $3.50
Dec2008 $3.48
Dec2007 $3.89
Dec2006 $2.35
Dec2005 $1.43
Dec2004 $0.95
Dec2003 $0.82
Dec2002 $0.66
Dec2001 $0.53
Dec2000 $0.53
Dec1999 $0.32

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.98
Dec2017 $2.88
Dec2016 $2.51
Dec2015 $2.47
Dec2014 $2.56
Dec2013 $2.94
Dec2012 $2.92
Dec2011 $3.10
Dec2010 $3.29
Dec2009 $3.28
Dec2008 $2.92
Dec2007 $2.39
Dec2006 $1.51
Dec2005 $1.01
Dec2004 $0.77
Dec2003 $0.65
Dec2002 $0.51

Recommended Reading:

Other ModernGraham posts about the company

Garmin Ltd Valuation – March 2017 $GRMN
Garmin Limited Valuation – August 2016 $GRMN
Garmin Ltd Stock Valuation – February 2016 $GRMN
Garmin Limited Analysis – September 2015 Update $GRMN
Garmin Limited Analysis – June 2015 Update $GRMN

Other ModernGraham posts about related companies

Hewlett Packard Enterprise Co Valuation – June 2018 $HPE
Fortive Corp Valuation – June 2018 $FTV
Analog Devices Inc Valuation – June 2018 $ADI
IPG Photonics Corp Valuation – June 2018 $IPGP
Micron Technology Inc Valuation – May 2018 $MU
Amphenol Corp Valuation – May 2018 $APH
Xilinx Inc Valuation – May 2018 $XLNX
Western Digital Corp Valuation – May 2018 $WDC
Texas Instruments Inc Valuation – May 2018 $TXN
Qualcomm Inc Valuation – May 2018 $QCOM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Garmin Ltd Valuation – March 2017 $GRMN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Garmin Ltd (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Garmin) and subsidiaries offer global positioning system (GPS) navigation and wireless devices and applications. The Company operates through five segments. It offers a range of auto navigation products, as well as a range of products and applications designed for the mobile GPS market. It offers products to consumers around the world, including Outdoor Handhelds, Wearable Devices, Golf Devices, and Dog Tracking and Training/Pet Obedience Devices. It offers a range of products designed for use in fitness and activity tracking. Garmin offers a range of products designed for use in fitness and activity tracking. Its aviation business segment is a provider of solutions to aircraft manufacturers, existing aircraft owners and operators, as well as military and government customers and serves a range of aircraft, including transport aircraft, business aviation, general aviation, experimental/light sport, helicopters, optionally piloted vehicles and unmanned aerial vehicles.

GRMN Chart

GRMN data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of GRMN – March 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,788,562,246 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.89 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -23.26% Fail
6. Moderate PEmg Ratio PEmg < 20 20.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.86 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.89 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $2.50
MG Growth Estimate -2.23%
MG Value $10.10
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $36.25
MG Value based on 0% Growth $21.25
Market Implied Growth Rate 6.08%
Current Price $51.67
% of Intrinsic Value 511.69%

Garmin Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.94 in 2013 to an estimated $2.5 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.08% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Garmin Ltd. revealed the company was trading above its Graham Number of $32.13. The company pays a dividend of $2.04 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.67, which was below the industry average of 28.12, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $6.1.

Garmin Ltd. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $6.10
Graham Number $32.13
PEmg 20.67
Current Ratio 2.89
PB Ratio 2.86
Current Dividend $2.04
Dividend Yield 3.95%
Number of Consecutive Years of Dividend Growth 8

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $2,263,016,000
Total Current Liabilities $782,735,000
Long-Term Debt $0
Total Assets $4,525,133,000
Intangible Assets $305,002,000
Total Liabilities $1,107,130,000
Shares Outstanding (Diluted Average) 189,343,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.53
Dec2016 $2.70
Dec2015 $2.39
Dec2014 $1.88
Dec2013 $3.12
Dec2012 $2.76
Dec2011 $2.67
Dec2010 $2.95
Dec2009 $3.50
Dec2008 $3.48
Dec2007 $3.89
Dec2006 $2.35
Dec2005 $1.43
Dec2004 $0.95
Dec2003 $0.82
Dec2002 $0.66
Dec2001 $0.53
Dec2000 $0.53
Dec1999 $0.32

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.50
Dec2016 $2.51
Dec2015 $2.47
Dec2014 $2.56
Dec2013 $2.94
Dec2012 $2.92
Dec2011 $3.10
Dec2010 $3.29
Dec2009 $3.28
Dec2008 $2.92
Dec2007 $2.39
Dec2006 $1.51
Dec2005 $1.01
Dec2004 $0.77
Dec2003 $0.65
Dec2002 $0.51
Dec2001 $0.38

Recommended Reading:

Other ModernGraham posts about the company

Garmin Limited Valuation – August 2016 $GRMN
Garmin Ltd Stock Valuation – February 2016 $GRMN
Garmin Limited Analysis – September 2015 Update $GRMN
Garmin Limited Analysis – June 2015 Update $GRMN
18 Companies in the Spotlight This Week – 3/15/15

Other ModernGraham posts about related companies

Hewlett Packard Enterprise Co Valuation – Initial Valuation $HPE
Fortive Corp Valuation – Initial Coverage $FTV
Analog Devices Inc Valuation – February 2017 $ADI
Micron Technology Inc Valuation – February 2017 $MU
Amphenol Corp Valuation – February 2017 $APH
Kopin Corporation Valuation – Initial Coverage $KOPN
Xilinx Inc Valuation – February 2017 $XLNX
Western Digital Corporation Valuation – February 2017 $WDC
Texas Instruments Inc Valuation – February 2017 $TXN
Knowles Corp Valuation – Initial Coverage $KN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Garmin Limited Valuation – August 2016 $GRMN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Garmin Limited (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Garmin) and subsidiaries offer global positioning system (GPS) navigation and wireless devices and applications. Garmin designs, develops, manufactures, markets and distributes a family of hand-held, wearable, portable and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products. It operates through five business segments: marine, outdoor, fitness, auto and aviation. Garmin offers a range of auto navigation products, as well as a range of products and applications designed for the mobile GPS market. It offers products designed for use in outdoor activities. It offers products designed for use in fitness and activity tracking. It offers a range of products designed for use in the recreational marine industry. It offers products designed for use in the recreational marine industry. Its aviation product line includes GPS-enabled navigation and very high frequency (VHF) communications transmitters/receivers.

GRMN Chart

GRMN data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of GRMN – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,960,110,731 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.19 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -39.19% Fail
6. Moderate PEmg Ratio PEmg < 20 22.21 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.13 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.19 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

GRMN value chart August 2016

EPSmg $2.39
MG Growth Estimate -2.71%
MG Value $7.38
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $34.70
MG Value based on 0% Growth $20.34
Market Implied Growth Rate 6.86%
Current Price $53.16
% of Intrinsic Value 720.36%

Garmin Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.92 in 2012 to an estimated $2.39 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.86% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Garmin Ltd. revealed the company was trading above its Graham Number of $29.95. The company pays a dividend of $2.04 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 22.21, which was below the industry average of 22.64, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $4.77.

Garmin Ltd. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

GRMN charts August 2016

Net Current Asset Value (NCAV) $4.77
Graham Number $29.95
PEmg 22.21
Current Ratio 2.19
PB Ratio 3.13
Current Dividend $2.04
Dividend Yield 3.84%
Number of Consecutive Years of Dividend Growth 7

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $2,212,587,000
Total Current Liabilities $1,010,429,000
Long-Term Debt $0
Total Assets $4,527,583,000
Intangible Assets $303,348,000
Total Liabilities $1,308,748,000
Shares Outstanding (Diluted Average) 189,356,000

Earnings Per Share History

Next Fiscal Year Estimate $2.34
Dec2015 $2.39
Dec2014 $1.88
Dec2013 $3.12
Dec2012 $2.76
Dec2011 $2.67
Dec2010 $2.95
Dec2009 $3.50
Dec2008 $3.48
Dec2007 $3.89
Dec2006 $2.35
Dec2005 $1.43
Dec2004 $0.95
Dec2003 $0.82
Dec2002 $0.66
Dec2001 $0.53
Dec2000 $0.53
Dec1999 $0.32

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.39
Dec2015 $2.47
Dec2014 $2.56
Dec2013 $2.94
Dec2012 $2.92
Dec2011 $3.10
Dec2010 $3.29
Dec2009 $3.28
Dec2008 $2.92
Dec2007 $2.39
Dec2006 $1.51
Dec2005 $1.01
Dec2004 $0.77
Dec2003 $0.65
Dec2002 $0.51
Dec2001 $0.38
Dec2000 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Garmin Ltd Stock Valuation – February 2016 $GRMN
Garmin Limited Analysis – September 2015 Update $GRMN
Garmin Limited Analysis – September 2015 Update $GRMN
Garmin Limited Analysis – June 2015 Update $GRMN
18 Companies in the Spotlight This Week – 3/15/15

Other ModernGraham posts about related companies

Amphenol Corporation Valuation – August 2016 $APH
Agilent Technologies Inc Valuation – August 2016 $A
Texas Instruments Inc Valuation – August 2016 $TXN
Xilinx Inc Valuation – August 2016 $XLNX
Western Digital Corporation Valuation – August 2016 $WDC
Apple Inc Valuation – August 2016 $AAPL
Ametek Inc Valuation – August 2016 $AME
MTS Systems Corp Valuation – July 2016 $MTSC
Seagate Technology PLC Valuation – July 2016 $STX
Broadcom Limited Valuation – July 2016 $AVGO

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Garmin Ltd Stock Valuation – February 2016 $GRMN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Garmin Ltd (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Garmin) is a provider of navigation, communications and information devices, which are enabled by Global Positioning System (GPS) technology. The Company operates through five business segments: marine, outdoor, fitness, automotive/mobile, and aviation markets. It designs, develops, manufactures, markets and distributes a family of hand-held, wearable, portable and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products. It offers a range of automotive navigation products, as well as a range of products and applications designed for the mobile GPS market. It offers a range of products designed for use in outdoor activities. It offers a range of products designed for use in fitness and activity tracking. Garmin offers a range of products designed for use in the recreational marine industry. Garmin’s aviation product line includes GPS-enabled navigation, and electronic flight instrumentation systems (EFIS), among others.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of GRMN

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,640,649,909 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.49 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -26.44% Fail
6. Moderate PEmg Ratio PEmg < 20 14.39 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.03 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.49 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

GRMN value chart February 2016

EPSmg $2.39
MG Growth Estimate -3.45%
MG Value $5.65
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $34.63
MG Value based on 0% Growth $20.30
Market Implied Growth Rate 2.94%
Current Price $34.36
% of Intrinsic Value 608.13%

Garmin Ltd. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.10 in 2011 to an estimated $2.39 for 2015. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.94% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price. Garmin Ltd. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

GRMN charts February 2016

Net Current Asset Value (NCAV) $5.65
Graham Number $28.67
PEmg 14.39
Current Ratio 2.49
PB Ratio 2.03
Dividend Yield 5.76%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Total Current Assets $2,231,953,000
Total Current Liabilities $894,656,000
Long-Term Debt $0
Total Assets $4,388,472,000
Intangible Assets $220,848,000
Total Liabilities $1,153,787,000
Shares Outstanding (Diluted Average) 190,822,000

Earnings Per Share History

Next Fiscal Year Estimate $2.15
Dec2014 $1.88
Dec2013 $3.12
Dec2012 $2.76
Dec2011 $2.67
Dec2010 $2.95
Dec2009 $3.50
Dec2008 $3.48
Dec2007 $3.89
Dec2006 $2.35
Dec2005 $1.43
Dec2004 $0.95
Dec2003 $0.82
Dec2002 $0.66
Dec2001 $0.53
Dec2000 $0.53
Dec1999 $0.32

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.39
Dec2014 $2.56
Dec2013 $2.94
Dec2012 $2.92
Dec2011 $3.10
Dec2010 $3.29
Dec2009 $3.28
Dec2008 $2.92
Dec2007 $2.39
Dec2006 $1.51
Dec2005 $1.01
Dec2004 $0.77
Dec2003 $0.65
Dec2002 $0.51
Dec2001 $0.38
Dec2000 $0.26
Dec1999 $0.11

Recommended Reading:

Other ModernGraham posts about the company

Garmin Limited Analysis – September 2015 Update $GRMN
Garmin Limited Analysis – June 2015 Update $GRMN
18 Companies in the Spotlight This Week – 3/15/15
Garmin Limited Quarterly Valuation – March 2015 $GRMN
26 Companies in the Spotlight This Week – 12/13/14

Other ModernGraham posts about related companies

Emerson Electric Co Valuation – February 2016 $EMR
Agilent Technologies Inc Valuation – February 2016
Western Digital Corp Valuation – February 2016
Xilinx Inc Valuation – February 2016 $XLNX
Texas Instruments Inc Valuation – February 2016 $TXN
Apple Inc Valuation – February 2016 $AAPL
Ametek Inc Valuation – February 2016 Update $AME
MTS Systems Corp Valuation – February 2016 Update $MTSC
Linear Technology Corp Valuation – January 2016 Update $LLTC
Seagate Technology PLC Valuation – January 2016 Update $STX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Garmin Limited Analysis – September 2015 Update $GRMN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Garmin Limited (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Garmin) is a provider of navigation, communications and information devices, which are enabled by Global Positioning System (GPS) technology. The Company operates through five business segments: marine, outdoor, fitness, automotive/mobile, and aviation markets. It designs, develops, manufactures, markets and distributes a family of hand-held, wearable, portable and fixed-mount GPS-enabled products and other navigation, communications, sensor-based and information products. It offers a range of automotive navigation products, as well as a range of products and applications designed for the mobile GPS market. It offers a range of products designed for use in outdoor activities. It offers a range of products designed for use in fitness and activity tracking. Garmin offers a range of products designed for use in the recreational marine industry. Garmin’s aviation product line includes GPS-enabled navigation, and electronic flight instrumentation systems (EFIS), among others.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of GRMN – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,966,968,683 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.37 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -25.10% Fail
6. Moderate PEmg Ratio PEmg < 20 15.09 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.19 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.37 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

GRMN value Chart September 2015

EPSmg $2.43
MG Growth Estimate -3.24%
MG Value $5.58
Opinion Overvalued
MG Value based on 3% Growth $35.25
MG Value based on 0% Growth $20.67
Market Implied Growth Rate 3.30%
Current Price $36.70
% of Intrinsic Value 658.16%

Garmin Limited qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only initial concern is the insufficient earnings growth over the last ten years, while the Enterprising Investor is only concerned with the lack of earnings growth over the last five years.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $3.10 in 2011 to an estimated $2.43 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 3.30% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Garmin Limited (GRMN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

GRMN Charts September 2015

Net Current Asset Value (NCAV) $5.58
Graham Number $29.36
PEmg 15.09
Current Ratio 2.37
PB Ratio 2.19
Dividend Yield 5.31%
Number of Consecutive Years of Dividend Growth 6

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $2,283,296,000
Total Current Liabilities $961,681,000
Long-Term Debt $0
Total Assets $4,423,409,000
Intangible Assets $222,968,000
Total Liabilities $1,214,904,000
Shares Outstanding (Diluted Average) 191,600,000

Earnings Per Share History

Next Fiscal Year Estimate $2.28
Dec14 $1.88
Dec13 $3.12
Dec12 $2.76
Dec11 $2.67
Dec10 $2.95
Dec09 $3.50
Dec08 $3.48
Dec07 $3.89
Dec06 $2.35
Dec05 $1.43
Dec04 $0.95
Dec03 $0.82
Dec02 $0.66
Dec01 $0.53
Dec00 $0.53
Dec99 $0.32

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.43
Dec14 $2.56
Dec13 $2.94
Dec12 $2.92
Dec11 $3.10
Dec10 $3.29
Dec09 $3.28
Dec08 $2.92
Dec07 $2.39
Dec06 $1.51
Dec05 $1.01
Dec04 $0.77
Dec03 $0.65
Dec02 $0.51
Dec01 $0.38
Dec00 $0.26
Dec99 $0.11

Recommended Reading:

Other ModernGraham posts about the company

Garmin Limited Analysis – June 2015 Update $GRMN
18 Companies in the Spotlight This Week – 3/15/15
Garmin Limited Quarterly Valuation – March 2015 $GRMN
26 Companies in the Spotlight This Week – 12/13/14
23 Companies to Research This Week – 9/13/14

Other ModernGraham posts about related companies

Texas Instruments Inc Analysis – September 2015 Update $TXN
My Personal Holdings: Apple Inc. – September 2015 Update $AAPL
The Best Stocks of the IT Hardware Industry – September 2015
Seagate Technology PLC Analysis – September 2015 Update $STX
Microchip Technology Inc. Analysis – September 2015 Update $MCHP
KLA-Tencor Corporation Analysis – September 2015 Update $KLAC
Avago Technologies Ltd Analysis – Initial Coverage $AVGO
Arrow Electronics Inc. Analysis – Initial Coverage $ARW
TE Connectivity Limited Analysis – August 2015 Update $TEL
Broadcom Corporation Analysis – August 2015 Update $BRCM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Garmin Limited Analysis – June 2015 Update $GRMN

500px-Garmin_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – June 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Garmin Limited (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Gramin) is provider of navigation, communication and information devices and applications, many of which are enabled by Global Positioning System (GPS) technology. Garmin designs, develops, manufactures and markets a range of hand-held, portable and fixed-mount GPS-enabled products and other navigation, communications and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets. The Company operates five segments, including Automotive/Mobile, Aviation, Marine, Outdoor and Fitness. As of December 28, 2013, Garmin’s non-aviation products are sold in approximately 100 countries through a worldwide network of approximately 4,000 independent dealers. The Company sells its products in the United States, Europe, Middle East, Australia/New Zealand and Africa.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years - PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 - PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - PASS
  3. Earnings Stability – positive earnings per share for at least 5 years - PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - FAIL

Valuation Summary

Key Data:

Recent Price $44.37
MG Value $11.12
MG Opinion Overvalued
Value Based on 3% Growth $38.49
Value Based on 0% Growth $22.56
Market-implied growth rate 4.11%
NCAV $7.46
PEmg 16.71
Current Ratio 3.03
PB Ratio 2.45

Balance Sheet – March 2015

Current Assets $2,500,000,000
Current Liabilities $824,000,000
Total Debt $0
Total Assets $4,543,000,000
Intangible Assets $224,000,000
Total Liabilities $1,066,000,000
Outstanding Shares 192,300,000

Earnings Per Share

2015 (estimate) $2.95
2014 $1.88
2013 $3.12
2012 $2.76
2011 $2.67
2010 $2.95
2009 $3.50
2008 $3.48
2007 $3.89
2006 $2.35
2005 $1.43

Earnings Per Share – ModernGraham

2015 (estimate) $2.65
2014 $2.56
2013 $2.94
2012 $2.92
2011 $3.10
2010 $3.29

Dividend History

Conclusion:

Garmin Limited qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the insufficient earnings growth over the last ten years.  The Enterprising Investor is concerned with the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding further with an analysis.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $3.10 in 2011 to only an estimated $2.65 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 4.11% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value well below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Garmin Limited (GRMN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Garmin Limited Quarterly Valuation – March 2015 $GRMN

500px-Garmin_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – March 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Garmin Limited (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Garmin) is a provider of navigation, communication and information devices and applications, which are enabled by global positioning system (GPS) technology. Garmin designs, develops, manufactures and markets a diverse family of hand-held, portable and fixed-mount GPS-enabled products and other navigation, communications and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets. Garmin has four segments: Automotive/Mobile, Aviation, Marine, Outdoor and Fitness. In September 2012, its subsidiary acquired Nexus Marine AB, a designer and manufacturer of instrumentation for the sailing and yachting market. In June 2014, the Company acquired Fusion Electronics Ltd and its subsidiaries.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years - PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 - PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - FAIL

Valuation Summary

Key Data:

Recent Price $48.00
MG Value $4.84
MG Opinion Overvalued
Value Based on 3% Growth $37.17
Value Based on 0% Growth $21.79
Market-implied growth rate 5.11%
NCAV $6.35
PEmg 18.73
Current Ratio 2.43
PB Ratio 2.71

Balance Sheet – December 2014

Current Assets $2,511,000,000
Current Liabilities $1,033,000,000
Total Debt $0
Total Assets $4,693,000,000
Intangible Assets $218,000,000
Total Liabilities $1,290,000,000
Outstanding Shares 192,400,000

Earnings Per Share

2014 $1.88
2013 $3.12
2012 $2.76
2011 $2.67
2010 $2.95
2009 $3.50
2008 $3.48
2007 $3.89
2006 $2.35
2005 $1.43
2004 $0.95

Earnings Per Share – ModernGraham

2014 $2.56
2013 $2.94
2012 $2.92
2011 $3.10
2010 $3.29
2009 $3.28

Dividend History

Conclusion:

Garmin Limited is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low earnings growth over the last ten years, along with the high PB ratio, while the Enterprising Investor is only concerned with the lack of earnings growth over the last five years.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $3.29 in 2010 to only $2.56 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 5.11% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Garmin Limited (GRMN) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Garmin Limited (GRMN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Garmin Limited (GRMN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Garmin Limited Quarterly Valuation – December 2014 $GRMN

500px-Garmin_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Dow Components to Research – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Garmin Limited (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Garmin) is a provider of navigation, communication and information devices and applications, which are enabled by global positioning system (GPS) technology. Garmin designs, develops, manufactures and markets a diverse family of hand-held, portable and fixed-mount GPS-enabled products and other navigation, communications and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets. Garmin has four segments: Automotive/Mobile, Aviation, Marine, Outdoor and Fitness. In September 2012, its subsidiary acquired Nexus Marine AB, a designer and manufacturer of instrumentation for the sailing and yachting market. In June 2014, the Company acquired Fusion Electronics Ltd and its subsidiaries.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years - PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 - PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - FAIL

Valuation Summary

Key Data:

Recent Price $55.95
MG Value $16.41
MG Opinion Overvalued
Value Based on 3% Growth $42.97
Value Based on 0% Growth $25.19
Market-implied growth rate 5.19%
NCAV $5.14
PEmg 18.88
Current Ratio 2.16
PB Ratio 3.32

Balance Sheet – September 2014

Current Assets $2,421,000,000
Current Liabilities $1,123,000,000
Total Debt $0
Total Assets $4,669,000,000
Intangible Assets $222,000,000
Total Liabilities $1,433,000,000
Outstanding Shares 192,200,000

Earnings Per Share

2014 (estimate) $3.08
2013 $3.12
2012 $2.76
2011 $2.67
2010 $2.95
2009 $3.50
2008 $3.48
2007 $3.89
2006 $2.35
2005 $1.43
2004 $0.95

Earnings Per Share – ModernGraham

2014 (estimate) $2.96
2013 $2.94
2012 $2.92
2011 $3.10
2010 $3.29
2009 $3.28

Dividend History

Conclusion:

Garmin Limited qualifies for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the poor earnings growth over the last ten years along with the high PB ratio, while the Enterprising Investor is only concerned by the lack of earnings growth over the last five years.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $3.29 in 2010 to an estimated $2.96 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 5.19% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Garmin Limited (GRMN) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Garmin Limited (GRMN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Garmin Limited (GRMN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Garmin Limited Quarterly Stock Valuation – September 2014 $GRMN

500px-Garmin_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Enterprising Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Garmin Limited (GRMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Garmin Ltd. (Garmin) is a provider of navigation, communication and information devices and applications, which are enabled by global positioning system (GPS) technology. Garmin designs, develops, manufactures and markets a diverse family of hand-held, portable and fixed-mount GPS-enabled products and other navigation, communications and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets. Garmin has four segments: Automotive/Mobile, Aviation, Marine, Outdoor and Fitness. In September 2012, its subsidiary acquired Nexus Marine AB, a designer and manufacturer of instrumentation for the sailing and yachting market. In June 2014, the Company acquired Fusion Electronics Ltd and its subsidiaries.
GRMN Chart

GRMN data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 - PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - FAIL

Valuation Summary

Key Data:

Recent Price $53.27
MG Value $15.12
MG Opinion Overvalued
Value Based on 3% Growth $42.39
Value Based on 0% Growth $24.85
Market-implied growth rate 4.86%
NCAV $6.41
PEmg 18.22
Current Ratio 2.58
PB Ratio 2.95

Balance Sheet – 6/28/2014

Current Assets $2,496,600,000
Current Liabilities $969,300,000
Total Debt $0
Total Assets $4,741,800,000
Intangible Assets $213,200,000
Total Liabilities $1,261,200,000
Outstanding Shares 192,620,000

Earnings Per Share

2014 (estimate) $2.96
2013 $3.12
2012 $2.76
2011 $2.67
2010 $2.95
2009 $3.50
2008 $3.48
2007 $3.89
2006 $2.35
2005 $1.43
2004 $0.94

Earnings Per Share – ModernGraham

2014 (estimate) $2.92
2013 $2.94
2012 $2.92
2011 $3.10
2010 $3.29
2009 $3.28

Dividend History

GRMN Dividend Chart

GRMN Dividend data by YCharts

Conclusion:

Garmin qualifies for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned with the lack of sufficient earnings growth over the last ten years as well as the high PB ratio while the Enterprising Investor’s only initial concern is the lack of earnings growth over the last five years.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be overvalued after growing seeing its EPSmg (normalized earnings) drop from $3.29 in 2010 to an estimated $2.92 for 2014.  This demonstrated drop in earnings clearly does not support the market’s implied estimate of 4.86% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out the previous ModernGraham valuations of Garmin Limited (GRMN) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Garmin Limited (GRMN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Garmin Limited (GRMN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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