GARMIN LTD (GRMN): what the price requires
At today's price, GARMIN LTD (GRMN) is priced for today's economics sustained for ~14.2 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/GRMN
Headline
| Field | Value |
|---|---|
| Ticker | GRMN |
| Company | GARMIN LTD |
| Current price | $242.27/sh |
| Composition | Fitness 33% / Outdoor 28% / Aviation 14% / Marine 16% / Auto OEM 9% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | segment |
| Must persist for | 14.2y |
Solve inputs: computed at a 10% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.6 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| cohort percentile (of 225 peers) | 99 |
| sustained it ~10 years at this level | 14% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.47x | 5 | expensive |
| Earnings | 2.63x | 5 | expensive |
| Relative | 1.42x | 5 | expensive |
| Growth | 0.89x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $273.55 | 0.89x | yes | FCF base $1.8B, growth 16% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection |
| DCF Exit Multiple | Growth | $310.98 | 0.78x | yes | Exit EV/EBITDA: 20.2x / 22.2x / 24.2x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $205.35 | 1.18x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 18.1x / 22.0x / 25.9x (bear / base = reference held flat / bull), EV/EBITDA 16.46x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $96.97 | 2.50x | yes | BV/sh $47.90, ROE (TTM) 18.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $136.31 | 1.78x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $253.33 | 0.96x | yes | Rev $7.5B, growth 16% (input: historical growth; tapered), Terminal P/S: 5.2x / 6.3x / 7.4x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $170.50 | 1.42x | yes | EPS $8.96, growth 19% (input: historical EPS growth), PEG=1.42 (Fair) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $77.53 | 3.12x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.32B × (1−14%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $134.20 | 1.81x | yes | BV $47.90 + 5yr PV of (ROE (TTM) 18.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $98.26 | 2.47x | yes | √(22.5 × EPS $8.96 × BVPS $47.90) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $156.73 | 1.55x | yes | EBITDA $2.02B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $92.04 | 2.63x | yes | FCF $1451.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $82.45 | 2.94x | yes | SBC-adj FCF $1.28B (FCF $1.45B − SBC $0.17B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $289.11 | 0.84x | yes | EPS $8.96 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $26.85 | 9.02x | yes | BV $47.90 × (ROIC 5.2% / WACC 9.2%) |
| P/Sales Sector | Relative | $77.12 | 3.14x | yes | Revenue $7.46B × sector P/S 2.0x |
| PEG Fair Value | Relative | $255.75 | 0.95x | yes | EPS $8.96 × (PEG 1.5 × growth 19.0% (input: historical EPS growth)) → PE 28.5x |
| Earnings Yield | Earnings | $96.86 | 2.50x | yes | EPS $8.96 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $2.7b |
| Net debt / NOPAT (after-tax) | -1.86x (net cash) |
| Net debt / operating income (pre-tax) | -1.59x (net cash) |
| Share count CAGR (dilution) | 0.0% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- At about $233.98 only the growth-oriented methods reach the price; the asset and earnings-power methods land far below, between roughly $78 and $137. The premium is for durable, diversified compounding the static frames cannot capture.
- The balance sheet is a fortress: about $2.7 billion of net cash, zero gross debt, and a dividend the company funds easily, paying $173.6 million in dividends and buying back $40 million of stock in the quarter while still generating $469 million of free cash flow.
- The first quarter set records across the board: revenue rose 14% to $1.753 billion, operating income jumped 30% to $432 million, gross margin reached 59.4%, and the Fitness segment grew 42% to a record $547 million.
Bull Case
What the traditional valuation models miss about Garmin is the gap between what the numbers say and what the business actually is. On a static lens, the asset and earnings-power methods mark the stock at $78 to $137, far below the price, because they read Garmin as a consumer-electronics hardware maker, a category the market discounts for cyclicality and commoditization. But Garmin is not a single hardware line; it is five distinct franchises, Fitness, Outdoor, Aviation, Marine, and Auto OEM, each with its own moat, and the company runs them at a gross margin near 59% with zero debt and $2.7 billion of net cash. The FY2025 10-K describes how costs of goods sold and operating expenses are "directly attributed to each segment" (FY2025 10-K, accession 0001193125-26-056028), which underlines that these are genuinely separate businesses, not one product cycle. A diversified portfolio of high-margin, category-leading franchises is worth more than the sum the hardware-discount methods assign.
The first quarter showed every part of the engine firing. Revenue rose 14% to a record $1.753 billion, operating income jumped 30% to a first-quarter-record $432 million, gross margin expanded 180 basis points to 59.4%, and operating margin rose 290 basis points to 24.6%. The standout was Fitness, up 42% to a record $547 million on strong demand for advanced wearables, the segment where Garmin competes most directly with much larger rivals and is still taking share because its battery life, ruggedness, and training analytics, features like Training Readiness and Body Battery, are not matched at any price by mass-market smartwatches. EPS of $2.08 beat the $1.81 estimate, and management maintained full-year guidance of roughly $7.9 billion in revenue and $9.35 of pro forma EPS.
The capital structure and innovation cadence make the premium defensible. With no debt and $2.7 billion of cash, Garmin self-funds about 100 new product launches a year across all five segments and still returns cash, recommending a $4.20 annual dividend and buying back stock, while generating $469 million of free cash flow in a single quarter. For a buyer who sees five moaty franchises rather than one hardware line, the premium to the static methods is the price of owning a debt-free compounder that keeps setting records.
Bear Case
The bear case starts with a qualitative observation rather than a ratio: Garmin sells discretionary hardware, and the price treats it like a software compounder. Strip away the brand affection and the business is, at its core, a maker of physical devices that consumers buy once and replace every few years, in categories where the largest technology companies in the world are either already competing or could choose to. The numbers are the evidence for the worry, not the worry itself. The asset-based methods land near $97 to $136 and the earnings-power value near $78, all far below the $233.98 price (June 27, 2026), because they capitalize the actual, cyclical hardware earnings rather than a perpetual compounding story. When a stock trades at three times its earnings-power value, the market is betting the hardware never has a bad cycle.
The competitive reality in the franchise that is driving the growth is the sharpest version of that risk. Fitness, up 42% and now the largest segment contributor to growth, competes directly with Apple, whose watch dominates the mass market through seamless smartphone integration and whose scale dwarfs Garmin's. Garmin wins today on battery life, durability, and serious-athlete analytics, a real and defensible niche, but it is a niche, and a single strong product cycle from a much larger competitor, or a shift in consumer preference toward all-in-one devices, could slow the very segment the elevated price depends on. Hardware moats are narrower than software moats because the switching cost resets every purchase.
The valuation leaves no cushion for a stumble. Only the growth-DCF reaches the price, and the inverted read embeds operating growth sustained for roughly 15 years, a remarkably long duration that the framework flags as high relative to base rates. That is a demanding assumption for a discretionary-hardware company exposed to consumer cycles, foreign-currency swings (the quarter's margin gain was helped by favorable currency, which can reverse), and competition from far larger rivals. The fortress balance sheet protects against bankruptcy, not against a de-rating: if growth decelerates or a product cycle disappoints, the stock has a long way to fall toward the asset and earnings methods in the low hundreds. Analyst opinion reflects the tension, with a mixed consensus and targets spanning $220 to $325, a wide range that captures genuine disagreement about whether the premium is earned.
Valuation
Garmin's X-ray has the classic moat-premium shape: only the growth frames reach the price and everything else sits below. The growth-DCF methods land highest, with a perpetual-growth DCF near $273 and an exit-multiple DCF near $302, plus a discounted-future-market-cap method near $245. The relative methods land in the middle, with a peer-multiple method near $204, an EV/EBITDA method near $157, and the Peter Lynch method near $170. The asset and earnings-power methods land far below: simple excess return near $97, residual income near $134, earnings-power value near $78, and free-cash-flow capitalization near $92.
The inverted view names the premium. At the current price the embedded assumption is operating growth sustained for roughly 15 years, computed on a whole-company basis, which the framework characterizes as high because few companies sustain growth that long. The price is supported only by the growth-DCF, with asset, earnings, and peer methods all saying richly valued. In plain terms, the market is paying for durable compounding across five franchises that the static frames, which treat Garmin as cyclical hardware, structurally cannot price.
The honest synthesis is that the premium is a bet on durability, and Garmin has earned more of that benefit of the doubt than most hardware companies. Five diversified, high-margin franchises, a debt-free balance sheet, $2.7 billion of cash, a 59% gross margin, and a record quarter are real and unusual quality. But the methods that anchor to current earnings power sit well below the price, the growth duration the price assumes is long, and the most important growth segment competes against far larger rivals. The value depends on the moat across Fitness, Outdoor, Aviation, Marine, and Auto holding for many years, not on the current quarter, and a buyer at this price is underwriting a compounding profile the static methods do not support.
Catalysts
The near-term catalyst is the segment growth trajectory, especially Fitness, which grew 42% to a record $547 million on advanced wearables; sustaining that momentum is what the premium valuation requires, and the roughly 100 new products planned for 2026, including launches like the quatix 8 Pro, are the concrete drivers. Guidance is the key earnings benchmark, with management maintaining full-year revenue of about $7.9 billion and pro forma EPS of $9.35 after a first-quarter beat of $2.08 versus $1.81. Margin trajectory is a watch item, since the quarter's gross-margin gain to 59.4% was helped by favorable foreign currency that can reverse. Capital allocation is a standing positive, with a recommended $4.20 annual dividend, ongoing buybacks, and $469 million of quarterly free cash flow funded entirely from a debt-free balance sheet with $2.7 billion of cash. The competitive dynamic in wearables is the dominant risk catalyst, with Apple and other large players pressing on the mass market while Garmin defends the serious-athlete niche on battery life and analytics. Sentiment is mixed, with targets ranging from $220 to $325, including a Tigress Strong Buy at $325 and a Morgan Stanley Equal Weight at $249, so continued record results across multiple segments are what would resolve the debate in the bulls' favor.
Sources: StockTitan Q1, PRNewswire Q1, Motley Fool transcript, MarketBeat forecast
Peer Cohorts (Per Segment, With Filing Citations)
Fitness / Outdoor (reported)
- TDY (TELEDYNE TECHNOLOGIES INC)
- (no filing in the citation store)
- HON (Honeywell International Inc)
- (no filing in the citation store)
Aviation (reported)
- HON (Honeywell International Inc)
- (no filing in the citation store)
- TDY (TELEDYNE TECHNOLOGIES INC)
- (no filing in the citation store)
- HEI (HEICO CORPORATION)
- (no filing in the citation store)
Marine (reported)
- CAT (CATERPILLAR INC)
- (no filing in the citation store)
- DE (DEERE & CO)
- (no filing in the citation store)
- HON (Honeywell International Inc)
- (no filing in the citation store)
- EMR (EMERSON ELECTRIC CO.)
- (no filing in the citation store)
Auto OEM (reported)
- APTV (APTIV PLC)
- (no filing in the citation store)
- BWA (BORGWARNER INC)
- (no filing in the citation store)
- LEA (LEAR CORP)
- (no filing in the citation store)
- ALV (AUTOLIV, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.