Tigress Financial Bullish on Garmin Stock Amid Record Q1 Results
Tigress Financial Partners has reaffirmed its confidence in Garmin Ltd. (NYSE:GRMN), maintaining a Strong Buy rating and elevating the 12-month price target to $210.00 per share. This optimistic stance is in reaction to Garmin’s publication of unprecedented first-quarter earnings, primarily driven by their dominant fitness products and the continuous launch of innovative new offerings.
Garmin’s achievement in multiplying key categories is complemented by operational enhancements and margin growth, thereby increasing shareholder value. The company reported a 20% increase in Q1 revenue year-over-year, marking a record $1.38 billion. This success stems from the company’s solid performance across four essential business segments and the introduction of compelling new products.
The fitness segment, in particular, saw a 40% surge in revenue compared to the previous year, totaling $342.89 million. Additionally, the company’s gross margin saw an improvement to 58.1%, reflecting the strong brand loyalty and increasing demand for Garmin’s sophisticated smart wearables.
Garmin attributes its robustness to a wide-ranging customer base interested in aviation, marine, fitness, and outdoor activities. Its strategy of introducing new products and achieving operational excellence has been crucial in acquiring new customers, as shown by heightened registration and application enrollment rates. The company expects its Auto OEM revenue to rise with the acquisition of new clients.
Moreover, Garmin’s industry position is further reinforced by its advancements in avionics, marine navigation, and smart wearables, particularly those that feature health monitoring and fitness tracking. A significant proportion of platform registrations are from new customers, signifying an expanding user base. Garmin continues to enhance the functionality of its Garmin Connect fitness app and website, aiming to add more features.
The company’s portfolio, which now includes features like LTE connectivity for selected smart wearables, satellite-based services, and regular updates for maps and golf courses, is poised to increase recurring subscription revenues.
Garmin’s financial stability and strong cash flow enable continuous investments in product development, fueling its capacity to maintain a market-leading return on capital, generate economic profit, and enhance long-term shareholder value. Furthermore, Garmin is committed to increasing shareholder returns, as evidenced by its strategic dividend increases and share repurchases.
Backed by Tigress Financial Partners’ uplifted price target of $210 and dividends, Garmin is envisioned to offer a potential total return surpassing 25% from its current levels. Complementing this positive outlook, Garmin exhibits robust financial health and promising investment metrics, with a notable market capitalization of $32.61 billion. The company’s P/E ratio is at 23.76, suggesting investor confidence in its earnings potential. Additionally, Garmin’s PEG ratio over the last twelve months stands at 0.57 as of Q1 2024, suggesting the stock may be undervalued relative to its earnings growth.
Garmin’s consistent effort to increase its dividend for seven consecutive years, along with a dividend yield of 1.77% and uninterrupted dividend payments for 22 years, exemplifies the company’s dedication to shareholder returns. This approach has supported a strong total return of 67.25% over the past year, highlighting the stock’s impressive performance. For investors seeking deeper insights, further detailed analysis and tips are available, underscoring Garmin’s promising outlook and reinforcing its position as an attractive investment option.
