Last update on 2024-06-06

Garmin (GRMN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Garmin (GRMN) achieves a Piotroski F-Score of 8/9 in 2023, indicating a strong financial position through enhanced profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 8

We're running Garmin (GRMN) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a number between 0 and 9 which reflects a company's financial strength. It uses 9 criteria involving profitability, liquidity, and leverage. Garmin (GRMN) was evaluated against this model and achieved a high Piotroski Score of 8, indicating strong financial health. Garmin showed positive net income, strong cash flow, improved return on assets, and higher operating cash flow than net income. Their leverage decreased, current ratio improved, and outstanding shares decreased. However, gross margin showed a slight decline. Overall, the results indicate Garmin has robust profitability, operational efficiency, and strong liquidity.

Insights for Value Investors Seeking Stable Income

Garmin (GRMN) looks like a solid investment choice based on its high Piotroski Score of 8. The company has shown consistent profitability, strong cash flow, low leverage, and improved liquidity. While there is a slight concern with the marginal decrease in gross margin, overall, the financial metrics suggest that Garmin is a strong and stable company that's worth considering for investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Garmin (GRMN)

Company has a positive net income?

The criterion examines whether Garmin\u2019s net income for 2023 is positive, reflecting the company\u2019s profitability. A positive net income indicates that the business is generating more revenue than expenses.

Garmin's net income for 2023 stands at $1,289,636,000, which is positive. Compared to previous years, this is a substantial increase, signaling robust financial health and operational efficiency. Historically, Garmin has consistently reported positive net income, except for minor fluctuations post-2008 recession with the lowest in 2014 at $364,211,000. The increasing trend assures investors of Garmin's profitability and growth potential.

Company has a positive cash flow?

Cash Flow from Operations (CFO) determines whether a company generates adequate cash flow from its core operating activities. This metric is crucial as it shows if the company's operations can sustain its business without needing external financing. Positive CFO indicates financial health and operational efficiency.

For Garmin Ltd. (GRMN), the Cash Flow from Operations (CFO) in 2023 is $1,376,265,000. This figure is positive, which signifies a robust financial state and implies that Garmin is successfully generating cash from its daily business activities. Over the last 20 years, Garmin has managed to maintain a trend of positive CFO except for some fluctuations, consistent increases, reflecting the company's solid operational performance. It's essential to note that despite challenges, the company has almost doubled its CFO in comparison to the previous year (2022), setting it at $788,259,000, representing a substantial year-over-year growth.

Return on Assets (ROA) are growing?

Change in ROA evaluates whether a company's return on assets has improved over the year, reflecting better efficiency in using assets to generate profits.

Garmin's ROA for 2023 stands at 0.1579, an increase from 0.1249 in 2022. This trend indicates a positive development, as the company appears to be utilizing its assets more effectively to generate earnings. This increase is a significant improvement of approximately 26.48% year-over-year, showing strong operational performance. Considering this uptick in ROA, Garmin earns 1 point for this criterion.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income criterion and its importance.

In 2023, Garmin's Operating Cash Flow (OCF) figures amounted to $1,376,265,000, while its Net Income stood at $1,289,636,000. Evidently, the OCF is superior to net income, which aligns positively with the Piotroski F-Score. Historically, this indicator is crucial as it ferrets out firms with potentially high-quality earnings. Studying data from the last two decades underscores this pattern, with notable OCF fluctuations but generally aligning above net income, particularly in challenging economic climates such as 2008. Therefore, for this criterion, Garmin secures a point, showcasing robust cash generation capabilities versus stated profits.

Liquidity of Garmin (GRMN)

Leverage is declining?

The Change in Leverage criterion evaluates whether a company has decreased its leverage or debt level compared to the previous year.

Garmin (GRMN) had a leverage ratio of 0.0148 in 2022 and 0.0131 in 2023. Since the leverage ratio decreased in 2023, Garmin earns 1 point for this criterion. This decline indicates improved financial health and potentially lower financial risk. Historically, Garmin's leverage level has been relatively low and stable, with notable increases beginning in 2019 and slight reductions thereafter. The company's efforts to reduce leverage in 2023 are a positive sign for investors.

Current Ratio is growing?

the criterion for Garmin (GRMN) and why it is important to consider

The Current Ratio is a liquidity ratio that measures a company's ability to cover its short-term liabilities with its short-term assets. A higher Current Ratio indicates that the company has a greater ability to pay off its short-term obligations, which is a positive sign of financial health. In 2023, Garmin's Current Ratio increased to 3.406 from 3.2643 in 2022, suggesting improved liquidity. This increase is favorable relative to the industry median, which stood at 2.6482 in 2023. Consistently high Current Ratios well above the industry median indicate strong short-term financial stability for Garmin.

Number of shares not diluted?

Change in Shares Outstanding analyzes the difference in Outstanding Shares between two periods.

In 2022, Garmin (GRMN) had 192,544,000 Outstanding Shares, which decreased to 191,397,000 in 2023. Since the Outstanding Shares decreased in 2023, this trend earns 1 point according to the Piotroski Analyses. Decreasing Outstanding Shares is generally a positive signal as it indicates that the company is buying back its stock—reducing supply and, in some cases, signaling confidence in the business. Reviewing the historical data, the trend over the last 20 years shows fluctuations; however, the general movement from 2015 onward suggests efforts in stock buybacks, aligning with recent data confirming this positive trend.

Operating of Garmin (GRMN)

Cross Margin is growing?

The Change in Gross Margin criterion examines the profitability influenced by production efficiency, crucial for assessing business health.

In 2023, Garmin's gross margin was 0.5748, slightly down from 0.5775 in 2022, which results in a 0 point score. This marginal decrease raises concerns about production costs or sales pricing. Long-term data shows fluctuations, but Garmin consistently outperforms industry medians. For instance, compared to the 2023 industry median of 0.4813, Garmin remains robust, suggesting strong positioning despite the slight decline.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures the company's efficiency in using its assets to generate revenue. Increasing ratios are a positive sign.

Garmin's Asset Turnover increased slightly from 0.6237 in 2022 to 0.6401 in 2023. This trend reflects a positive development in their asset utilization efficiency. Given Garmin's historical asset turnover figures over the past 20 years, the company's highest efficiency was observed in 2007 with a ratio of 1.2259. While the recent increase is modest, it signals a rebound from the lowest point in 2013 (0.5427). With this improvement, a point is awarded.