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What Lies in Store for Garmin (GRMN) this Earnings Season?

Garmin Ltd. GRMN, a leading provider of navigation, communication and information devices, is slated to report second-quarter 2017 results before the bell on Aug 2.

The company has a Zacks Rank #3 (Hold) and an Earnings ESP of -2.47%, a combination that constrains our surprise prediction. 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.

However, Garmin’s surprise history has been quite impressive, since the company has beaten estimates in each of the last four quarters with an average positive surprise of 28.20%.

Year to date, the stock has underperformed the industry it belongs to. It gained 5.8% compared with the industry’s gain of 16.9%.

What Happened in the First Quarter?

Garmin’s first-quarter earnings surpassed the Zacks Consensus Estimate on revenues that also beat estimates. The results were driven by solid performance in aviation, marine, outdoor and fitness segments. The auto segment however recorded revenue decline.

What We Are Watching this Time

Product line expansion continues to be Garmin’s top priority. In the first quarter, the company started shipping fenix 5 series with three designs, G1000 NXi integrated flight deck, new touchscreen and keyed chartplotter combo offerings and inReach handhelds. Garmin also launched Forerunner 935 multisport watch, and introduced the vívosmart 3 with all-day stress tracking. The company received European Aviation Safety Agency certification of the GTX 345.

Garmin Ltd. Price and EPS Surprise

With a strong product development pipeline, management expects to continue with product launches through the year. We expect that Garmin will continue to focus on innovation, diversification and market expansion to explore growth opportunities in all business segments. However, macroeconomic challenges remain part of the operating environment.

Summing Up

Garmin focuses on delivering innovative products to the market, offering a complete experience via compelling form factors, wireless connectivity and sensors. This along with contribution from acquisitions is a positive. However, the secular decline in PNDs, increasing competition and pricing pressure are concerns.

Stocks that Warrant Look

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:

Symantec Corporation SYMC, with an Earnings ESP of +16.67% and Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arrow Electronics, Inc. ARW, with an Earnings ESP of +1.13% and a Zacks Rank #2.

The Priceline Group Inc. PCLN, with an Earnings ESP of +2.31% and a Zacks Rank #3.

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The Priceline Group Inc. (PCLN): Free Stock Analysis Report
 
Symantec Corporation (SYMC): Free Stock Analysis Report
 
Garmin Ltd. (GRMN): Free Stock Analysis Report
 
Arrow Electronics, Inc. (ARW): Free Stock Analysis Report
 
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