Garmin Q3 Earnings Beat: Will Upbeat Guidance Lift the Stock?

Garmin Ltd. GRMN reported third-quarter 2024 pro forma earnings of $1.99 per share, beating the Zacks Consensus Estimate by 36.3%. The bottom line improved 41% on a year-over-year basis.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Net sales were $1.58 billion, which surpassed the Zacks Consensus Estimate of $1.44 billion. The figure increased 24.1% from the year-ago quarter.Year-over-year growth in the top line was attributed to the solid momentum across Outdoor, Fitness, Aviation, Marine and Auto OEM segments.Buoyed by strong top-line and bottom-line performances, Garmin raised its earnings guidance range for the full year. The better-than-expected third-quarter results, along with upbeat guidance, can give a fresh boost to Garmin’s share price. Shares of GRMN have soared 59.5%, outperforming the Zacks Electronics - Miscellaneous Products industry’s decline of 16%.Garmin Ltd. Price, Consensus and EPS Surprise Garmin Ltd. price-consensus-eps-surprise-chart | Garmin Ltd. QuoteSegmental DetailsOutdoor (33.2% of Net Sales): The segment generated sales of $526.6 million in the reported quarter, up 21% year over year, driven by growth in Garmin’s adventure watches.Fitness (29.2%): The segment generated sales of $463.8 million, which increased 31% from the year-ago quarter, owing to solid demand for the company’s wearables.Aviation (12.9%): The segment generated sales of $204.6 million, up 3% on a year-over-year basis. This was driven by the solid momentum in the aftermarket product categories.Marine (14%): Garmin generated sales of $222.2 million from the segment, up 22% on a year-over-year basis. This was driven by benefits from the JL Audio buyout.Auto OEM (10.6%): The segment generated sales of $168.7 million, up 53% from the prior-year quarter. This was primarily attributed to growing shipments of domain controllers.Operating ResultsIn the third quarter, the gross margin was 60%, which expanded 300 basis points (bps) from the year-ago period.Garmin’s operating expenses of $514 million grew 12% from the prior-year quarter due to rising personnel costs in research and development and sales and marketing. As a percentage of revenues, the figure contracted 350 bps year over year to 34.6%.The operating margin was 27.6% in the reported quarter, which expanded 640 bps year over year.Balance Sheet & Cash FlowAs of Sept. 28, 2024, cash, cash equivalents and marketable securities were $2.42 billion, up from $2.22 billion as of June 29, 2024.In the third quarter of 2024, Garmin generated an operating cash flow of $258 million and a free cash flow of $219 million compared with the operating cash flow of $255 million and a free cash flow of $218 million reported in the prior quarter.The company paid out a quarterly dividend of $144 million and repurchased $20 million of shares in the reported quarter.2024 GuidanceGarmin has raised its 2024 revenue guidance from $6.12 billion to $5.75 billion. The Zacks Consensus Estimate for 2024 net sales is pegged at $6 billion.The company has also revised the pro-forma earnings per share guidance upward from $6 to $6.85. The consensus mark for 2024 earnings is pegged at $6.09 per share.It expects gross margin, operating margin and tax rate to be 58.5%, 24% and 16.5, respectively.Garmin’s Zacks Rank & Stocks to ConsiderGarmin currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader technology sector are Shopify SHOP, Fortinet FTNT and F5 Inc FFIV. While Shopify and Fortinet sport a Zacks Rank #1 (Strong Buy) each, F5 carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.The consensus mark for Shopify’s 2024 earnings has been revised upward by 13 cents to $1.12 per share over the past 90 days, indicating a 51.31% year-over-year increase. The long-term expected earnings growth rate for the stock stands at 39.2%. Shares of SHOP have gained 2.7% in the year-to-date period.The Zacks Consensus Estimate for Fortinet’s 2024 earnings has been revised upward by 2 cents to $2.03 per share in the past 30 days, indicating an increase of 24.5% on a year-over-year basis. It has a long-term earnings growth expectation of 16.3%. Shares of FTNT have jumped 34.5% in the year-to-date period.The Zacks Consensus Estimate for FFIV’s fiscal 2024 earnings has been revised upward by 3 cents to $14.03 per share in the past 30 days, suggesting a year-over-year increase of 5%. It has a long-term earnings growth expectation of 7.8%. Shares of FFIV have plunged 33.5% in the year-to-date period.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Garmin Ltd. (GRMN): Free Stock Analysis Report F5, Inc. (FFIV): Free Stock Analysis Report Fortinet, Inc. (FTNT): Free Stock Analysis Report Shopify Inc. (SHOP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks