Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, navigation device maker Garmin (Nasdaq: GRMN ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Garmin's business and see what CAPS investors are saying about the stock right now.
Garmin facts
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Headquarters (founded)
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Camana Bay, Cayman Islands (2000)
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Market Cap
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$5.9 billion
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Industry
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Consumer electronics
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Trailing-12-Month Revenue
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$1.26 billion
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Management
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CEO Min Kao (since 2002)
CFO Kevin Rauckman (since 2000)
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Return on Capital (average past 3 years)
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21.7%
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Cash/Debt
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$1.26 billion / $0
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One-Year Return
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2.5%
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Competitors
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Apple (Nasdaq: AAPL )
Google (Nasdaq: GOOG )
Research In Motion (Nasdaq: RIMM )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 8% of the 5,048 members who have rated Garmin believe the stock will underperform the S&P 500 going forward. These bears include All-Stars JJRzut and georcole, both of whom are ranked in the top 15% of our community.
Late last month, JJRzut touched on why Garmin is going in the wrong direction:
GPS is going full commodity. If Garmin doesn't get acquired soon I can ride this all the way into the doldrums. Shame as I was once a huge fan of this stock (circa 2002).
In a world where GPS technology is becoming more and more common on mobile gadgets, Fools remain skeptical about how Garmin will manage to stay relevant. While heavyweights such as Apple, Google, and Research In Motion continue to reap the benefits of a rapidly growing smartphone market, Garmin has experienced double-digit top- and bottom-line declines over the past few years.
If enough of Garmin's customers feel the same as CAPS All-Star georcole does, those bearish trends are likely to continue:
I have a GPS on my phone that I don't have to pay for and gets updated all the time for free. I just stick to the Garmin because I am more familiar with it. When it starts leading me in the wrong direction too much, I'll just get used to the GPS on my phone.
If I feel this way, there are probably lots of others who feel this way too. What is the current growth rate of smart phones? Once enough people have smart phones, Garmin is going to see their sales fall off of a cliff. They will still be needed in boats, but that isn't a very big market. Good luck Garmin. Gotta get a(way from) Garmin.
What do you think about Garmin, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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