GRMN - Embedded Expectations Analysis - 2020 03 02
Garmin Ltd (GRMN:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with an 18.7x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about growth, inventory levels, and their auto segment suggest the potential for near-term headwinds, long-term upside remains warranted.Specifically, management may lack confidence in their ability to sustain revenue and EPS growth, drive organic growth at Tacx, and manage R&D costs. Moreover, they may be concerned about increases in their inventory levels and the sustainability of success at their aviation segment. Finally, management may be overstating the impact their license agreement has on income mix, and they may be concerned about revenue declines in their auto segment and the impact of OEM on gross margin.
However, given GRMN's strong positioning in a niche market and overly bearish market expectations, long-term upside remains warranted.
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