Will Garmin (GRMN) Surprise This Earnings Season? - Analyst Blog


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Garmin Ltd. ( GRMN ) is set to report fourth-quarter 2013 results on Feb 19. Last quarter, it posted 15.0% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Garmin's third-quarter earnings were above the Zacks Consensus Estimate driven by strong growth in new products that are increasingly diversifying its business. However, revenues of $643.6 million were down 7.6% sequentially and 4.3% year over year.

Gross margins also decreased 30 basis points (bps) sequentially but were up 140 bps year over year. The year-over-year increase was due to a favorable segment mix. Also, the amortization of previously deferred revenues helped margins. The operating margin shrank 80 bps sequentially and 20 bps year over year to 23.6% in the last quarter.

Earnings Whispers?

Our proven model does not conclusively show that Garmin will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:   Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 61 cents. Hence, the difference is 0.00%.

Zacks Rank: Garmin has a Zacks Rank #1 (Strong Buy) which, when combined with a 0.00% 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

You could consider other stocks with a positive earnings ESP and a Zacks Rank #1, 2 or 3 such as:

Westlake Chemical Corp. ( WLK ), with Earnings ESP of +4.50% and a Zacks Rank #1

Ship Finance International Limited ( SFL ), with Earnings ESP of +52.63% and a Zacks Rank #1

ProAssurance Corporation ( PRA ), with Earnings ESP of +13.59% and a Zacks Rank #1

GARMIN LTD (GRMN): Free Stock Analysis Report

PROASSURANCE CP (PRA): Free Stock Analysis Report

SHIP FIN INTL (SFL): Free Stock Analysis Report

WESTLAKE CHEM (WLK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
More Headlines for: GRMN , PRA , SFL , WLK

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