Dear Followers&Copiers, Another Financial Year (FY) has passed, the reporting season is over and it’s time to update the equity portfolio of the Global Leaders Portfolio (GLP) in terms of the SIAScore we use. Let’s quickly remind what SIAScore is and how the process goes:
S1: growing sector 1pts/0pts,
S2: incumbent or prospective global leader 1pts/0pts,
S3: growing or stable wide margins (40%+ gross; 3yr avg) 2pts/0pts,
S4: Net Debt/EBITDA <1.5 (last 3 ended FYs) 2pts/0pts,
S5: above-average cash flows (FCF/MktCap (last 3 ended FYs) > S&P500 Dividend Yield or US 10yr Treasry Yield (higher of the values)) 2pts/0pts;
MAX TOTAL SCORE: 8pts/MIN TOTAL SCORE: 0pts/MIN SCORE TO QUALIFY: 4pts
In this post I run a SIAScore update for $GRMN, which “offers global positioning system (GPS) navigation and wireless devices and applications. The Company operates through five segments. It offers a range of auto navigation products, as well as a range of products and applications designed for the mobile GPS market. It offers products to consumers around the world, including Outdoor Handhelds, Wearable Devices, Golf Devices, and Dog Tracking and Training/Pet Obedience Devices. It offers a range of products designed for use in fitness and activity tracking. Its aviation business segment is a provider of solutions to aircraft manufacturers, existing aircraft owners and operators, as well as military and government customers and serves a range of aircraft, including transport aircraft, business aviation, general aviation, experimental/light sport, helicopters, optionally piloted vehicles and unmanned aerial vehicles.” (CNBC)
S1-S2: these qualitative points are clear. $GRMN both operates in a growing sector (S1) and is a global leader (S2) in the its industry. In both cases the company gets 1 point.
S3: 2 points
2018——2019——-2020——-AVG——-last yr AVG
59,1%…..59,5%………59,3%……..59,3%…….58,7%
$GRMN has a good Gross Profit Margin of almost 60% and manages to improve its 3yr avg in that respect, which is a welcome phenomenon. The company maintains good pricing power on its high-value-added products.
S4: 2 points
2018——2019——-2020——-AVG——-last yr AVG
-3,1……… -2,36…… -2,38…… -2,61…………-2,82
$GRMN is way in a net positive cash position and maintains it easily. No threat to the company’s liquidity around whatsoever. On the opposite, the company posesses a lot of cash for potential interesting takeovers and investments in working capital.
S5: 2 points
2018——2019——-2020——-AVG——-last yr AVG
6,42%……3,09%…..4,10%……4,54%……..4,72%
The FCF yield is easily above the minimum treshold level, which is currently at higher of the two: the $SPX500 dividend yield (1,53%) and the 10Y treasury note yield (1,67%). $GRMN keeps producing long-term shareholder value. Aggregate SIAScore for $GRMN : 8 points (stable YoY).
Conclusion: The company still easily fulfills all the necessary assumptions of SIAScore. Its financial standing is undisputed, high quality products of $GRMN are used widely and the trademark is very strong. Growing market of wearable devices and navigation systems supports the positive long-term view on the stock. GARMIN is good value for money.
Best regards, GlobalAlphaS
Disclaimers: None of the ideas, views and thoughts presented here shall ever be taken as a recommendation to buy or sell stocks,bonds,FX,commodities or any other financial instruments as stated in REGULATION (EU) No 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC or the Polish Act of 10 February 2017 amending the act on trading in financial instruments and some other acts. The article is for educational reasons and purely presents private views of the author, thus the author shall not be held accountable for any losses of a third party resulting from any potential trading activities in any instruments, both specifically or by category of assets. The author uses his best knowledge and data from sources believed to be reliable, but makes no representations as to the accuracy of the data.Full Disclaimers&Liability Limitations page.
