) is set to report first-quarter 2014 results on Apr 30. Last
quarter, it posted a 24.6% positive surprise. Let's see how
things are shaping up for this announcement.
Growth Factors This Past Quarter
Garmin posted better-than-expected fourth quarter 2013 results
with both the top and bottom lines surpassing the Zacks Consensus
Estimate. The bottom line exceeded expectations on the back of
strong growth in new products that are increasingly diversifying
The company is successfully diversifying its business away from
the shrinking personal navigation device (PND) market. The PND
market weakness continued in the last quarter, even though Garmin
remains the market leader in the category. The decline was
partially offset by growth in original equipment manufacturers
(OEM) and mobile product categories.
Though company expects the PND market to continue to impact top-
and bottom-line results, management provided an encouraging
guidance indicating strong growth.
Garmin expects 2014 revenues in the range of $2.6-$2.7 billion,
gross margin of 54-55%, operating income of $530-$565 million,
operating margin of approximately 21%, tax rate of 17% and
pro-forma earnings per share of $2.50 to $2.60. The Zacks
Consensus Estimate for the year is pegged at $2.53 per share,
which is at the lower end of the guidance range.
Our proven model does not conclusively show that Garmin will beat
estimates 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.
: Both the Most Accurate estimate and the Zacks Consensus
Estimate stand at 44 cents. Hence, the difference is 0.00%.
: Garmin's Zacks Rank #2 (Buy), 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
Here are some other companies, which you may want to consider as
our model shows that they have the right combination of elements
to post an earnings beat this quarter:
Advanced Energy Industries, Inc.
), with Earnings ESP of +10.00% and a Zacks Rank #1 (Strong Buy).
ON Semiconductor Corp.
), with Earnings ESP of +6.67% and a Zacks Rank #1.
ADV ENERGY INDS (AEIS): Free Stock Analysis
GARMIN LTD (GRMN): Free Stock Analysis Report
ON SEMICON CORP (ONNN): Free Stock Analysis
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