Does Garmin Ltd.’s (NASDAQ:GRMN) Past Performance Indicate A Weaker Future?

Examining Garmin Ltd.’s (NASDAQ:GRMN) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess GRMN’s latest performance announced on 29 December 2018 and weigh these figures against its longer term trend and industry movements.

See our latest analysis for Garmin

Was GRMN’s weak performance lately a part of a long-term decline?

GRMN’s trailing twelve-month earnings (from 29 December 2018) of US$694m has declined by -2.1% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.0%, indicating the rate at which GRMN is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and whether the entire industry is feeling the heat.

NasdaqGS:GRMN Income Statement, March 27th 2019
NasdaqGS:GRMN Income Statement, March 27th 2019

In terms of returns from investment, Garmin has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 12% exceeds the US Consumer Durables industry of 6.8%, indicating Garmin has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Garmin’s debt level, has increased over the past 3 years from 15% to 17%.

What does this mean?

Garmin’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research Garmin to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for GRMN’s future growth? Take a look at our free research report of analyst consensus for GRMN’s outlook.
  2. Financial Health: Are GRMN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 29 December 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.