Garmin Ltd. (NYSE: GRMN) shares have weakened from $178.8 to $132.23 since August 31, 2021, and the current price stands at $136.11.
Demand for active lifestyle products remain strong
Garmin is an American multinational technology company specializing in GPS technology, and the company also produces activity trackers and smartwatches.
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The COVID-19 pandemic has positively impacted sales of Garmin products, and the company reported strong third-quarter results in October.
Total revenue has increased by 7% Y/Y to $1.19 billion, while the GAAP EPS for the third fiscal quarter of 2021 was $1.34 (beats by $0.07).
Demand for active lifestyle products remains strong, and CEO Cliff Pemble expects this trend will continue in the upcoming quarters. Doug Boessen, CFO of Garmin added:
We achieved growth in 4 or 5 segments in the third quarter, double-digit growth in both Marine and Aviation. Fitness is our largest segment, contributing 29% of the sales in the third quarter, followed by outdoor at 27%.
The Americas region contributed nearly one-half of revenue, and the third-quarter earnings results showed that Garmin is moving in the right direction.
The company’s management revised financial guidance for the full fiscal year and expects revenue of approximately $4.95 billion, up 18% compared with the 2020 fiscal year with projected growth in all segments.
Full-year earnings per share should be approximately $5.60 based on a gross margin of approximately 58.2%.
During the third quarter of 2021, Garmin generated a free cash flow of $204 million, while the company’s management expects full-year free cash flow to be around $750 million.
The company declared a $0.67/share quarterly dividend at the beginning of this month, and it will be payable on December 31; for shareholders of record December 15.
Garmin is expanding its market share, but with a $26.18 billion market capitalization, shares of this company are a little expensive.
Garmin trades at more than eighteen times TTM EBITDA, the book value per share is $30, and there are better investment opportunities at the moment.
$150 represents current resistance
Garmin’s stock price has fallen more than 20% after reaching the highest level in 2021 of $178,8 on August 31.
The strong support level stands at $130, and if the price falls below this level, it would be a strong “sell†signal.
On the other side, if the price jumps above $150 resistance, it would signal trading shares, and the next target could be at $160 or even above.
Summary
Garmin’s business continues to perform well, and the company’s management raised guidance for the 2021 fiscal year on the basis of strong performance in the first three quarters. Demand for active lifestyle products remains strong, and the board of directors declared a $0.67/quarterly share dividend this month.
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