Value
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 6.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.4 |
| PEG | 3.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 23.5x
- ▸PEG: 3.30
GRMN · Why this verdict
Why Garmin (GRMN) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Garmin is a high-quality franchise with strong operating margins and a disciplined habit of beating quarterly estimates, but the stock has moved above its near-term price target and the risk/reward has turned negative — the setup warrants patience rather than fresh capital.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With margins of 23% and a Piotroski F-Score of 8 out of 9, the business exhibits the financial health and operational efficiency of a best-in-class franchise that has demonstrated the ability to sustain superior profitability across cycles. Quality breakdown | Net margin remains above 18% and Piotroski F-Score stays at or above 7 across the next four reporting periods. | →Stable |
| CounterFree cash flow converts at only 47% of reported net income — flagged as a quality concern — suggesting accruals may be overstating the true cash-generating capacity of the business. | ||
The company has beaten consensus earnings estimates in three of the last four quarters, averaging roughly 15% above the Street, suggesting management sets expectations conservatively and reliably delivers above them. Earnings | EPS positive surprises continue in at least 3 of the next 4 quarters, with the average surprise staying above 10%. | →Stable |
| CounterThe one in-line quarter in the recent streak, and the absence of explicit forward guidance, suggest the beat cadence could narrow as the business matures into its current product cycle. | ||
The stock trades above its 200-day moving average with rising on-balance volume, indicating that the price advance is supported by genuine accumulation rather than a low-conviction drift. Momentum breakdown | The stock maintains its position above the 200-day moving average and on-balance volume continues an upward trend over the next 60 trading days. | ↓Deteriorating |
| CounterMid-range technical readings — RSI near 51 and price sitting at the Bollinger mid-band — signal balanced supply and demand with no directional edge, and momentum could easily stall without a fresh fundamental catalyst. | ||
The stock has moved above its near-term resistance target, leaving effectively no upside to the take-profit level and producing a negative risk/reward ratio — conditions that make initiating or adding to a position unjustifiable on a risk-adjusted basis. Price targets | This concern resolves if upside to the price target recovers above 10% from the prevailing market price. | Tripped→Stable |
| CounterA business with recurring earnings beats and sector-leading margins can sustain a premium to technical targets when investors are pricing in a multi-year product roadmap that near-term resistance levels do not fully capture. | ||
Despite carrying an above-average dividend yield, the payout has been flagged as potentially unsafe given that free cash flow converts at only 47% of net income — a gap that raises questions about the durability of the distribution if earnings soften. Catalyst breakdown | This concern resolves if free cash flow rises to at least 80% of net income for 2 consecutive quarters, demonstrating the dividend is comfortably covered. | →Stable |
| CounterA Piotroski F-Score of 8 reflects a financially sound balance sheet overall, and a temporary dip in cash conversion need not impair a dividend that is well established and carries strong institutional expectations for continuity. | ||
With margins of 23% and a Piotroski F-Score of 8 out of 9, the business exhibits the financial health and operational efficiency of a best-in-class franchise that has demonstrated the ability to sustain superior profitability across cycles.
→StableQuality breakdown
- Expectation
- Net margin remains above 18% and Piotroski F-Score stays at or above 7 across the next four reporting periods.
CounterFree cash flow converts at only 47% of reported net income — flagged as a quality concern — suggesting accruals may be overstating the true cash-generating capacity of the business.
The company has beaten consensus earnings estimates in three of the last four quarters, averaging roughly 15% above the Street, suggesting management sets expectations conservatively and reliably delivers above them.
→StableEarnings
- Expectation
- EPS positive surprises continue in at least 3 of the next 4 quarters, with the average surprise staying above 10%.
CounterThe one in-line quarter in the recent streak, and the absence of explicit forward guidance, suggest the beat cadence could narrow as the business matures into its current product cycle.
The stock trades above its 200-day moving average with rising on-balance volume, indicating that the price advance is supported by genuine accumulation rather than a low-conviction drift.
↓DeterioratingMomentum breakdown
- Expectation
- The stock maintains its position above the 200-day moving average and on-balance volume continues an upward trend over the next 60 trading days.
CounterMid-range technical readings — RSI near 51 and price sitting at the Bollinger mid-band — signal balanced supply and demand with no directional edge, and momentum could easily stall without a fresh fundamental catalyst.
The stock has moved above its near-term resistance target, leaving effectively no upside to the take-profit level and producing a negative risk/reward ratio — conditions that make initiating or adding to a position unjustifiable on a risk-adjusted basis.
Tripped→StablePrice targets
- Expectation
- This concern resolves if upside to the price target recovers above 10% from the prevailing market price.
CounterA business with recurring earnings beats and sector-leading margins can sustain a premium to technical targets when investors are pricing in a multi-year product roadmap that near-term resistance levels do not fully capture.
Despite carrying an above-average dividend yield, the payout has been flagged as potentially unsafe given that free cash flow converts at only 47% of net income — a gap that raises questions about the durability of the distribution if earnings soften.
→StableCatalyst breakdown
- Expectation
- This concern resolves if free cash flow rises to at least 80% of net income for 2 consecutive quarters, demonstrating the dividend is comfortably covered.
CounterA Piotroski F-Score of 8 reflects a financially sound balance sheet overall, and a temporary dip in cash conversion need not impair a dividend that is well established and carries strong institutional expectations for continuity.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.6 |
| ROA | 7.9 |
| Gross margin | 7.8 |
| Op margin | 9.8 |
| Net margin | 10.0 |
| Current ratio | 8.6 |
| FCF quality | 3.7 |
| Moat | 8.4 |
| Piotroski F | 10.0 |
- ▸Strong margins: 23%
- ▸Earnings quality RED FLAG: 47% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.0 |
| EPS growth | 6.3 |
Momentum
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 1.2 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.2 |
| erm sentiment | 5.0 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $1,059,459 (0.002% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.7 |
| quality rank | 8.5 |
| growth rank | 5.3 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.4 |
| support resistance | 4.2 |
| 52w position | 7.9 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 6.4 |
| volatility | 6.1 |
| put call | 4.3 |
| implied vol | 5.6 |
| max pain risk | 7.0 |
| beta | 7.5 |
| debt equity | 9.9 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 9.9 |
| dividend safety | 4.8 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 4 days
How the verdict was assembled
Engine trigger
Wide-moat business. Accumulate on weakness.
Engine technical detail
verdict_path:
L4:PATH_E_WIDE_MOAT|ENTRY_STICKY:WITHIN_BANDPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.3<4.5
- ASYMMETRY:-1.0=NEGATIVE
- EARNINGS_PROXIMITY:4d<=7d
Warning (0)
none
Reward-to-Risk
-1.01
Upside
-6.1%
Downside
6.0%
Sizing output
STARTER
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeTemporary headwind — High quality (8.1) with weak momentum (3.3)
SuitabilityModerate — Balanced profile
Investment implication
The STRONG_BUY_WAIT verdict reflects the MOMENTUM gate's 3.3<4.5 outcome against Quality at 8.1 and asymmetric R:R of -1.01.
The strongest dimensions are Quality at 8.1, Insider at 7.3, and Catalyst at 7.2; the weakest are Momentum at 3.3, Value at 4.0, and Sentiment at 5.4. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of -1.01 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Beats
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2High Margin Quality Franchise
Trip ifNet margin compresses below 15% for 2 consecutive quarters.
- P3Volume Confirmed Momentum
Trip ifStock closes below its 200-day moving average for more than 15 consecutive trading sessions.
- P4Price Above Target Exhausted AsymmetryTripped
Trip ifUpside to take-profit target recovers above 10% from the prevailing market price.
- P5Dividend Sustainability Concern
Trip ifFree cash flow as a percentage of net income rises above 80% for 2 consecutive reporting periods.