Garmin's stock sees 12% rise in a week, maintains strong ROE

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Garmin's stock sees 12% rise in a week, maintains strong ROE
Credit: © Reuters.

Garmin (NYSE: GRMN ) experienced a 12% surge in its stock value over the past week, prompting closer examination of its financial performance. A key metric under consideration is the company's Return on Equity (ROE), which stands at 16%. This figure aligns with the industry average and signifies that Garmin generates $0.16 profit for every $1 of shareholder investment.

Despite the company's five-year growth rate of 7.1% lagging behind the industry's average growth rate of 31%, Garmin has shown resilience. This resilience is evident in its three-year median payout ratio of 53%, which is considered high. The company has maintained a consistent dividend payment for at least a decade and is expected to continue this trend with a future payout ratio of approximately 46%.

Analysts have forecasted that Garmin's ROE will hold steady at 16% in the future. The company's moderate earnings growth and high ROE are seen as positive indicators, though there is potential for improvement in its performance through increased profit reinvestment, which is currently low. However, industry analysts anticipate that Garmin will maintain its current growth rate.

InvestingPro Insights

In line with the InvestingPro data, Garmin's market capitalization stands at an adjusted 22.16B USD. The company's P/E ratio is 21.31, suggesting it's trading at a high price relative to its near-term earnings growth. Garmin's revenue growth over the last twelve months as of Q3 2023 was 2.16%, demonstrating its resilience in the face of industry challenges.

Turning to InvestingPro Tips, Garmin yields a high return on invested capital and holds more cash than debt on its balance sheet, reinforcing its strong financial standing. The company has also raised its dividend for 6 consecutive years, maintaining a consistent dividend payment for 21 years. This aligns with the article's mention of Garmin's high payout ratio and its commitment to rewarding shareholders. Despite some analysts revising their earnings downwards for the upcoming period, the company is predicted to remain profitable this year.

For more detailed insights and additional tips, consider exploring InvestingPro's comprehensive suite of investment tools and resources.

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