Garmin GRMN upgrades its fitness segment with the recent launch of its Lily 2 Active smartwatch, comprising built-in GPS and health and wellness features.
Featuring a classic design and enclosed in a metal case, the new wearable has a battery life of up to nine hours in a smartwatch and GPS mode, enabling users to stay active for a longer time during fitness activities.
Users can also have options to track different sleep stages, heart rate and heart rate variability, as well as monitor energy levels throughout the day to find suitable times of activity and rest.
GRMN’s Top-Line Growth to Ride on Strong Fitness
GRMN’s fitness revenues are projected to increase 20% for the year. The revenue growth rate for the Marine segment has been raised to 15% for the year. However, Garmin has maintained its 7% growth estimate for the Outdoor segment and a promising 50% growth rate for Auto OEM in 2024.
Garmin Ltd. Price and Consensus
Garmin Ltd. price-consensus-chart | Garmin Ltd. Quote
Garmin raised its 2024 revenue guidance from $5.75 billion to $5.95 billion. Pro-forma earnings guidance increased from $5.40 per share to $6 per share.
The Zacks Consensus Estimate for 2024 revenues is pegged at $5.97 billion, indicating growth of 14.11% year over year.
The consensus mark for 2024 earnings is pegged at $6.05, up 4.5% over the past 60 days, suggesting growth of 8.23% year over year.
Expanding Portfolio Aids GRMN’s Prospects
GRMN’s constant product launches are responsible for driving its top-line growth, positively impacting its share price movement and prospects.
On a year-to-date basis, Garmin’s shares have gained 31.6%, outperforming the broader Zacks Computer and Technology sector’s return of 22.6% and the industry’s appreciation of 18.2%.
GRMN’s Venu, Lily and Vivoactive smartwatch series, featuring new health and wellness capabilities with enhanced sleep tracking, stress and respiration analysis, is a positive move for its Fitness segment.
Its Fitness portfolio with new wearable launches helps in improving Garmin’s competitive position against the likes of Apple AAPL, Fitbit parent Alphabet GOOGL, Samsung and others. Year to date, Garmin shares have outperformed Apple and GOOGL’s return of 17.2% and 18.7%, respectively.
The launch of the Edge 1050 premium cycling computer with a vibrant color touchscreen display and built-in speaker for audible feedback, the Forerunner 165 Series, an affordable GPS-running smartwatch offering customized training plans and health metrics on a vibrant AMOLED display and Garmin Pay mobile payments are other notable developments in the Fitness segment.
The release of the latest Approach Z30 smart laser rangefinder, which sends distance measurements to a suitable Garmin smartwatch or the Garmin Golf smartphone app, might gain traction in the Outdoor segment. The launch of the GC 245 and GC 255 cameras, specifically designed to enhance proximity awareness and confidence while docking, might anticipate a further rise in the Marine segment.
However, weakness in the aftermarket product categories is a concern for the Aviation segment. Rising macroeconomic uncertainties and inflationary pressure are other risks.
Zacks Rank & Valuation
Garmin’s Value Score of D suggests a stretched valuation at this moment.
Garmin stock is trading at a premium with a forward 12-month Price/Sales of 5.14X compared with the industry’s 1.51X.
GRMN carries a Zacks Rank #3 (Hold) at present, implying that investors should wait for a better entry point to accumulate the stock.
Stock to Consider
AudioEye AEYE is a better-ranked stock in the broader sector, which is currently sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AEYE shares have gained a whopping 300.7% year to date. The long-term earnings growth rate for AudioEye is currently pegged at 25%.
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