) is set to report third quarter 2013 results on Oct 30. Last
quarter it posted a 16.9% positive surprise. Let's see how things
are shaping up for this announcement.
Growth Factors this Past Quarter
Garmin recorded strong second quarter revenues and margin
performance, with revenue growth in each of the traditional
segments of Outdoor, Fitness, Marine and Aviation. Gross margins
improved sequentially to 55% from 52% in the prior quarter as
segment mix and product mix improved in the seasonally stronger
The longer-term positives for Garmin remain the many new
higher-margin products that the company has been introducing over
the last few years and its strategy of increasingly targeting the
OEM segment with its offerings. The advantage of this strategy is
more stable revenues and steadier pricing over the long term.
Garmin's management has decided to maintain its revenue ($2.5
billion - $2.6 billion) and pro forma earnings per share ($2.30 -
$ 2.40) guidance for 2013.
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
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
: That is because both the Most Accurate estimate and the
Zacks Consensus Estimate stand at 60 cents. Hence, the difference
Zacks Rank #1
(Strong Buy): Note that stocks with Zacks Ranks of #1, #2 and #3
have a significantly higher chance of beating earnings. However,
the combination of Garmin's Zacks Rank # 1 (Strong Buy) and 0.0%
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:
), Earnings ESP of +0.83% and a Zacks Rank #2 (Buy)
Asml Holding NV
), Earnings ESP of +1.63% and Zacks Rank #3 (Hold)
), Earnings ESP of +2.00% and a Zacks Rank #1 (Strong
ARROW ELECTRONI (ARW): Free Stock Analysis
ASML HOLDING NV (ASML): Free Stock Analysis
GARMIN LTD (GRMN): Free Stock Analysis Report
JARDEN CORP (JAH): Free Stock Analysis Report
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