Garmin Surges 28% in 3 Months: Buy, Sell or Hold the Stock?

Core Viewpoint - Garmin (GRMN) has demonstrated significant stock performance, with a 27.8% increase over the past three months, outperforming both the Electronics - Miscellaneous Products industry and the broader Zacks Computer and Technology sector [1] Financial Performance - Garmin's third-quarter 2024 results exceeded expectations, driven by strong sales execution and effective cost management [2] - The company raised its 2024 revenue guidance from $5.95 billion to$6.12 billion, with pro-forma earnings guidance increasing from $6 per share to$6.85 per share [3] - The Zacks Consensus Estimate for 2024 revenues is $6.10 billion, indicating a year-over-year growth of 16.6$7.01 per share, reflecting a 25.4% year-over-year growth [3] Segment Performance - The Marine segment's revenue growth rate is maintained at 15%, while the Outdoor segment's growth estimate has been raised to 13% [4] - The Auto OEM guidance has been lowered to 40%, and a flat revenue estimate is provided for the Aviation segment in 2024 [4] Cash Flow and Liquidity - Garmin anticipates a full-year 2024 free cash flow of approximately $1.1 billion [5] - As of September 28, 2024, Garmin holds about$3.5 billion in cash and equivalents, an increase from $3.4 billion as of June 29, 2024 [6] - In Q3 2024, Garmin generated an operating cash flow of$258 million and a free cash flow of $219 million [6] Product Innovation - Garmin's continuous product releases, including the Venu, Lily, and Vivoactive smartwatch series, enhance its technological innovation and market position [7] - The Lily 2 Active smartwatch features integrated GPS and wellness capabilities, marking it as Garmin's smallest smartwatch with GPS [8] - The JL Audio SlamPak Audio System for Polaris SxS vehicles enhances the audio experience for outdoor enthusiasts [9] - The Approach R50 premium launch monitor and golf simulator allows golfers to practice year-round [10][11] - The Descent X50i dive computer features advanced communication technology for divers [12] - The G3000 PRIME integrated flight deck maximizes safety and efficiency for pilots [13] Valuation and Market Position - Garmin stocks are trading at a premium with a forward 12-month Price/Sales ratio of 6.56X compared to the industry's 4.30X, reflecting a Value Style Score of D [14] - Despite the premium valuation, Garmin's innovative edge and new business strategy justify its attractiveness to investors [14] - Garmin currently holds a Zacks Rank 1 (Strong Buy), suggesting that existing investors should hold while new buyers should accumulate the stock [15]