) is set to report fourth quarter fiscal 2012 results on Feb 20.
Last quarter it posted an 18.03% negative surprise. Let's see how
things are shaping up for this announcement.
Growth Factors This Past Quarter
Garmin's sales growth rates in the third quarter were higher than
the year-ago quarter due to strength in Outdoor and Aviation
segments. Garmin is witnessing great success in the Aviation
segment due to opportunities in the Part 25 certification market
and Outdoor segment owing to the launch of many new products,
which are gradually expanding its markets.
However, all other segments performed poorly in the last quarter
due to weak economic conditions across the world and particularly
in Europe. In terms of margin growth, the second quarter was
strong for Garmin due to favorable product mix and higher
The company has been introducing various new higher-margin
products and growing its strength in all segments other than the
portable navigation device (PND) segment. We believe that the
company's significant exposure to the PND segment, which is on a
secular decline, will continue toweigh on results.
Though the company has seen significant pricing stabilization
in the PND market, it has failed to deliver in terms of volumes.
We think that Garmin could ultimately improve upon the situation
by focusing on auto OEMs for in-dash solutions and by building a
presence in emerging Asian countries.
AUTODESK INC (ADSK): Free Stock Analysis
GARMIN LTD (GRMN): Free Stock Analysis Report
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SCIENTIFIC GAME (SGMS): Free Stock Analysis
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Our proven model does not conclusively show that Garmin is likely
to beat earnings this quarter. That is because a stock needs to
have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, #2 or #3 for this to happen. That is not
the case here as you will see below.
The Most Accurate estimate stands at $0.64 while the Zacks
Consensus Estimate is higher at $0.75. That is a difference of
Zacks Rank #4 (Sell):
Garmin's Zacks Rank #4 (Sell) lowers the predictive power
of ESP because the Zacks Rank #4 when combined with a negative
ESP makes surprise prediction difficult. We caution against
stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into
the earnings announcement, especially when the company is seeing
negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
), with an ESP of +15.79% and a Zacks Rank #2 (Buy).
), with an ESP of +42.86% and a Zacks Rank #2 (Buy).
Scientific Games Corporation
), with an ESP of +33.33% and a Zacks Rank #3 (Hold).