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Garmin (GRMN) Q3 Earnings May Reflect Persistent PND Weakness

Garmin Ltd. GRMN, a leading provider of navigation, communication and information devices, is slated to report third-quarter 2017 results before the bell on Nov 1. In the quarter, we expect weakness in Garmin’s Automotive and Fitness segments to offset strength in Marine, Aviation and Outdoor segments.

We observe that shares of Garmin have gained 16.1% year to date, underperforming the industry’s 27.2% rally.

Here are the expectations.


This segment is likely to improve year over year in the to-be-reported quarter driven by positive contributions from acquisition of Active Corporation. The Zacks Consensus Estimate for this segment’s revenues is pegged at $76 million. In the second quarter, Garmin’s Marine segment declined 2.7% year over year.


It is expected to perform well  this time around as Garmin continues to see strong sales of aftermarket products and positive contributions from OEM products. The Zacks Consensus Estimate for this segment’s revenues is pegged at $117 million. The Aviation segment’s second-quarter revenues increased 14.5% year over year.


Carrying on the momentum of the second quarter (up a massive 46.3% year over year), the segment is expected to record further improvement in the quarter and the remainder of the year. Growth will be driven by robust demand for f??nix watch series.  The Zacks Consensus Estimate for Outdoor segment revenues is pegged at $172 million.


The Fitness segment decreased 15% year over year and the decline is expected to continue in the to-be-reported quarter due to persistent low volumes in basic activity trackers. The Zacks Consensus Estimate for Fitness segment revenues stands at $177 million.


This segment has been declining for the past several quarters and the trend will continue given secular decline in personal navigation device (PND) market that offset, at times, almost entirely, the growth in its other segments. The Zacks Consensus Estimate for this segment’s revenues stands at $179 million.

Garmin Ltd. Price and EPS Surprise

What Our Model States

Garmin has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%, a combination that makes surprise prediction difficult. This is because, per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We don’t recommend Sell-rated stocks (Zacks Rank #4 or #5) going into the earnings announcement.

Stocks to Consider

Here are some stocks that you may want to consider as our model shows these have the right combination of elements to deliver a positive earnings surprise:

NVIDIA Corp. NVDA, with an Earnings ESP of +0.53% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

HubSpot, Inc. HUBS, with an Earnings ESP of +26.53% and a Zacks Rank #2.

Extreme Networks, Inc., EXTR with an Earnings ESP of +9.75% and a Zacks Rank #3.

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