Garmin EPS Almost Bad GPS, But... (GRMN)

Garmin Ltd. (NASDAQ: GRMN) posted first quarter earnings that were off the mark.  The GPS leader posted a profit gain of 6% to $147.8 million, or $0.69 EPS, on revenues of $663.8 million.  First Call had estimates at $0.75 EPS on $705.1 million.

The company generated $166 million in free cash flow during Q1-2008, and it ended with cash
and marketable securities balance of $1.2 billion. Overall gross margins remained stronger than expected as its automobile margins remained flat, marine gross margin rose by 9 points and outdoor/fitness and aviation remained stable.

This note from the release here shows a cautious company: While we are pleased with our strong performance in the first quarter, it is important to note that the global economic slowdown has impacted companies across the board.

Frankly, non of this should be a shock at all, at least not if there is anything similar to an efficient market theory where information manages to get priced in.  What is interesting is that estimates from Wall Street analysts haven’t really come in that much, despite different waves of data signaling slower sales and despite a near-50% share price drop since the last few days of 2007.

Shares closed at $46.44 yesterday, and shares are down over 5.5% at $43.84 in pre-market trading.  The 52-week trading range is $42.01 to $125.68.

Jon C. Ogg
April 30, 2008