GRMN

Garmin Ltd

TMT, Consumer


Presented:04/06/2020
Price:$75.44
Cap:$14.39B
Current Price:$166.84
Cap:$32.07B

Presented

Date04/06/2020
Price$75.44
Market Cap$14.39B
Ent Value$17.50B
P/E Ratio15.12x
Book Value$25.14
Div Yield3.02%
Shares O/S190.69M
Ave Daily Vol1,069,467
Short Int2.19%

Current

Price$166.84
Market Cap$32.07B
Garmin Ltd. is a holding company, which engages in the provision of navigation, communications and information devices, most of which are enabled by Global Positioning System (GPS) technology. It operates through the following five segments: Marine, Outdoor, Fitness, Auto and Aviation. The Marine segment manufactures and offers recreational marine electronics such as cartography, Sounders, Radar, Autopilot Systems and Sailing. The Outdoor segment offers products designed for use in outdoor activities such as Outdoor Handhelds, Adventure Watches, Golf Devices, Dog Tracking & Training Device, Garmin Connect & Garmin Connect Mobile and Connect IQ. The Fitness segment involves in products designed for use in fitness and activity tracking such as Running & Multi-Sport Watches, Cycling Computers, Power Mete, Safety & Awareness and Activity Tracking Devices. The Auto segment offers products designed for use in the auto market such as Personal Navigation Devices, Original Equipment Manufacturer (OEM) Solutions and Cameras. The Aviation segment provides solutions to aircraft manufacturers, existing aircraft owners and operators, as well as government/defense customers. The company was founded in 1989 and is headquartered in Schaffhausen, Switzerland.

Publicly traded companies mentioned herein: Apple Inc (AAPL), Garmin Ltd (GRMN)

Highlights

The presenter is short shares of Garmin Ltd (GRMN), which is very levered to consumer discretionary and aviation spending, both of which should experience an outsized negative impact in a recession. He believes the stock at ~$75 hasn’t priced in a decline in spend. Analysts haven’t taken down numbers yet, but he feels that the current consensus view is that the company will experience a 10% decline in revenue and a 20% decline in EPS over the course of 2020 and 2021. He feels that those declines could actually be twice as bad. Based on these dynamics, the presenter believes that the stock could trade down to the mid-30s, or ~50% downside from the current price. 

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Idea Discussion

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