Garmin (GRMN): Assessing Valuation Following Recent Share Price Pullback

Garmin (GRMN) shares edged higher today, gaining just under 1% following routine market moves. While there was no headline event driving today’s action, it offers a chance to assess how the stock has been performing recently.

See our latest analysis for Garmin.

Garmin’s latest share price of $196.88 reflects some short-term volatility, with a 1-month share price return of -7.97% and a 90-day pullback of -16.90%. Still, when you zoom out, Garmin has delivered a strong 122.06% total shareholder return over the past three years. Momentum has pulled back lately, but the longer-term growth story remains impressive in the context of ongoing innovation and a solid track record.

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With shares trading at a discount to analyst price targets and recent pullbacks contrasting with strong three-year returns, the big question emerges: is Garmin undervalued right now, or has the market already priced in its next stage of growth?

Most Popular Narrative: 14.8% Undervalued

With Garmin’s last close at $196.88 and the most widely followed narrative setting fair value at $231.14, consensus points to a meaningful discount. Fresh analyst commentary hints at what could power this gap. Here is the catalyst driving the narrative forward.

The launch of the Garmin Connect+ premium service, which offers AI-based health and fitness insights, is likely to boost subscription-based revenue growth and improve overall margins through higher-margin services. The new vívoactive 6 smartwatch release, with advanced features like an AMOLED display and enhanced sports apps, suggests potential revenue growth in the Fitness segment, supported by strong demand for advanced wearables.

Read the complete narrative.

Why are analysts so bullish? The narrative’s valuation hinges on ambitious profit growth and margin forecasts, plus a surprisingly robust multiple for future earnings. Curious about the numerical drivers and the optimism fueling an upgrade from both products and services? The real growth assumptions are hidden just beyond this summary.

Result: Fair Value of $231.14 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising operating costs or softness in Marine and Outdoor sales could challenge the bullish case for Garmin and limit its margin expansion in the future.

Find out about the key risks to this Garmin narrative.

Another View: Are Multiples Telling a Different Story?

While the consensus narrative sees Garmin as undervalued, the current share price reflects a price-to-earnings ratio of 24.1x, which is substantially higher than the US Consumer Durables industry average of 11.7x and even the fair ratio of 20.6x. This premium suggests investors might be paying up for perceived growth or safety, introducing real valuation risk if future growth falls short.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Garmin Narrative

If the current narrative doesn’t quite fit your outlook or you want to dig into the details yourself, you can shape your own Garmin story in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Garmin.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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