Investing in stocks involves the pursuit of outperforming the broader market. Active stock picking certainly carries risks, but it can also result in excess returns. Garmin, a technology company specializing in GPS navigation and wearable technology, has seen its stock price increase by an impressive 77% over the past five years, outpacing the broader market’s return of 57% (excluding dividends). However, recent returns have not been as remarkable, with the stock only delivering a 39% return in the last year, including dividends.
While some adhere to the efficient markets hypothesis, which assumes that markets are efficient and investors are rational, empirical evidence suggests otherwise. Investor sentiment towards a company can significantly influence its stock price. By examining the growth in earnings per share (EPS) and share price changes over time, we can gauge how investor attitudes have evolved.
Over the past five years, Garmin’s EPS has grown at an annual rate of 9.6%, nearly keeping pace with the annualized share price gain of 12%. This suggests that investor sentiment towards the company has remained relatively stable, with the share price responding to changes in EPS.
One notable aspect of Garmin is the modest remuneration of its CEO compared to other companies of similar size. While CEO pay is worth monitoring, a more critical question is whether the company will continue to grow its earnings in the future.
When evaluating investment returns, it is essential to consider both the total shareholder return (TSR) and share price return. The TSR takes into account cash dividends (assuming they were reinvested) and the calculated value of capital raisings and spin-offs. Garmin’s TSR over the past five years has been 101%, surpassing the previously mentioned share price return. The inclusion of dividends has certainly boosted the total shareholder return.
From a different perspective, Garmin shareholders have experienced a total shareholder return of 39% in the last year, which is an improvement compared to the annualized return of 15% over half a decade. This suggests that the company’s recent performance may be stronger, indicating progress over time. Delving deeper into Garmin, it’s worth investigating whether insiders have been buying or selling shares in the company.
While Garmin offers potential for growth, there are numerous other investment opportunities worth exploring. If you’re interested, check out our curated list of companies that we expect will grow their earnings.
Please note that the market returns mentioned in this article reflect the average returns of stocks currently traded on American exchanges.
Q: What is Garmin?
A: Garmin is a technology company specializing in GPS navigation and wearable technology.
Q: What has been the performance of Garmin’s stock?
A: Over the past five years, Garmin’s stock has climbed 77%, outperforming the broader market return of 57% (excluding dividends). However, in the last year, the stock has only returned 39%, including dividends.
Q: How has investor sentiment affected Garmin’s stock price?
A: By comparing the growth in earnings per share (EPS) and share price changes, it appears that investor sentiment towards Garmin has remained relatively stable, with the share price responding to changes in EPS.
Q: Has Garmin been delivering consistent earnings growth?
A: Garmin’s EPS has grown at an annual rate of 9.6% over the past five years, aligning closely with the annualized share price gain of 12%. This indicates that the growth in EPS has influenced the share price.
Q: What is the total shareholder return (TSR) of Garmin?
A: Garmin’s TSR over the past five years has been 101%, surpassing the share price return. The inclusion of dividends has contributed to this higher total shareholder return.
Q: Is Garmin currently experiencing positive performance?
A: In the last year, Garmin has generated a total shareholder return of 39%, showing improvement compared to the annualized return of 15% over half a decade. This suggests that the company may be performing better recently.
Q: Should I consider investing in Garmin?
A: While Garmin shows potential for growth, it is essential to explore other investment opportunities as well. Conduct thorough research and consider factors such as insider activity before making investment decisions.