Garmin Ltd (NYSE: GRMN)

Sector: Technology Industry: Scientific & Technical Instruments CIK: 0001121788
Market Cap 38.77 Bn
P/B 4.57
P/E 24.68
P/S 5.58
ROIC (Qtr) 16.57
Div Yield % 1.64
Rev 1y % (Qtr) 11.66
Total Debt (Qtr) 155.77 Mn
Debt/Equity (Qtr) 0.02

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.56B provides robust 10.04x coverage of total debt 155.77M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 9.56B provides 61.37x coverage of total debt 155.77M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 1.33B exceeds capital expenditure of 230.97M by 5.77x, indicating strong organic growth funding capability.
  • Tangible assets of 9.56B provide exceptional 74.58x coverage of deferred revenue 128.17M, showing strong service capability backing.
  • Operating cash flow of 1.56B provides strong 12.20x coverage of deferred revenue 128.17M, indicating service delivery capability.

Bear case

  • Operating cash flow of 1.56B barely covers its investment activities of (716.40M), with a coverage ratio of -2.18, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.56B provides thin coverage of dividend payments of (634.90M) with a -2.46 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (716.40M) provide weak support for R&D spending of 1.09B, which is -0.66x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 2.07B provide limited coverage of acquisition spending of (197.11M), which is -10.52x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Long-term investments of 1.38B represent a high 0.93x of fixed assets 1.48B, indicating potential overexposure to financial assets versus operational capabilities.

Peer comparison

Companies in the Scientific & Technical Instruments
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GRMN Garmin Ltd 38.77 Bn 24.68 5.58 0.16 Bn
2 KEYS Keysight Technologies, Inc. 34.91 Bn 41.07 6.49 2.78 Bn
3 COHR Coherent Corp. 28.91 Bn 244.51 4.78 3.51 Bn
4 TDY Teledyne Technologies Inc 23.87 Bn 29.19 3.98 2.53 Bn
5 TRMB Trimble Inc. 19.54 Bn 54.65 5.43 1.39 Bn
6 FTV Fortive Corp 18.68 Bn 31.02 3.31 3.31 Bn
7 MKSI Mks Inc 10.78 Bn 38.63 2.81 4.55 Bn
8 CGNX Cognex Corp 6.14 Bn 55.76 6.32 0.08 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.50 2.20
EV to Cash from Ops. EV/CFO 23.57 9.84
EV to Debt EV to Debt 236.53 22.70
EV to EBIT EV/EBIT 19.44 15.74
EV to EBITDA EV/EBITDA 18.73 11.58
EV to Free Cash Flow [EV/FCF] EV/FCF 27.65 24.79
EV to Market Cap EV to Market Cap 0.95 -2.78
EV to Revenue EV/Rev 5.31 6.45
Price to Book Value [P/B] P/B 4.57 7.12
Price to Earnings [P/E] P/E 24.68 13.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.47 -16.40
Dividend Payout Ratio % Div Payout % (Qtr) 40.40 -7.19
Dividend per Basic Share Div per Share (Qtr) 3.30 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 47.67 6.83
Interest Coverage Int. cover (Qtr) 0.00 -13.61
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -46.63 -21.70
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 3.16 101.63
Dividend Growth (1y) % Div 1y % (Qtr) 11.49 1.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 3.50 19.84
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 23.18 17.31
EBIT Growth (1y) % EBIT 1y % (Qtr) 21.31 20.90
EBT Growth (1y) % EBT 1y % (Qtr) 21.31 82.68
EPS Growth (1y) % EPS 1y % (Qtr) 3.16 65.55
FCF Growth (1y) % FCF 1y % (Qtr) 6.01 32.88
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 17.16 34.27
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.66 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.35 0.05
Cash Ratio Cash Ratio (Qtr) 1.18 2.99
Current Ratio Curr Ratio (Qtr) 3.32 4.83
Debt to Equity Ratio Debt/Equity (Qtr) 0.02 0.67
Interest Cover Ratio Int Coverage (Qtr) 0.00 -13.61
Times Interest Earned Times Interest Earned (Qtr) 0.00 -13.61
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 30.00 -296.15
EBIT Margin % EBIT Margin % (Qtr) 27.30 -316.09
EBT Margin % EBT Margin % (Qtr) 27.30 -351.37
Gross Margin % Gross Margin % (Qtr) 58.70 40.05
Net Profit Margin % Net Margin % (Qtr) 22.60 -354.10