Garmin set for fast growth... This GPS Maker's Execs Spend Capital Wisely
From: Jesse Sightler's Weblog
At the heart of the screen is a measure called return on invested capital. It divides profits by the sum of everything a company owns and everything it owes. Companies with high ROICs, studies show, are more likely than others to produce strong stock returns. Our screen also looks for brisk sales growth, modest stock valuations and more. See the recipe of criteria for details and use our stock screener anytime to run the search for yourself. It recently identified eight efficiency leaders among a database of 8,000 companies.
Garmin has a ROIC of about 33%, triple the median of companies that make up the S&P 500 index. Also, for every dollar in sales the company produces, it keeps 46 cents in gross profit, or what's left after paying for raw materials and manufacturing costs. Computer makers average about 35 cents and cellphone makers, about 37 cents. Even toy makers, whose cheap-to-build products need only giggle when you squeeze them rather than help you find your way home, manage gross profits of just 42 cents on the dollar.
It's interesting that the article touches on so many obscure things that GPS is being used for, but leaves out the bread-and-butter business for Garmin. Their avionics business is going strong, with high margins, and remarkably little in the way of competition on the way.
At the heart of the screen is a measure called return on invested capital. It divides profits by the sum of everything a company owns and everything it owes. Companies with high ROICs, studies show, are more likely than others to produce strong stock returns. Our screen also looks for brisk sales growth, modest stock valuations and more. See the recipe of criteria for details and use our stock screener anytime to run the search for yourself. It recently identified eight efficiency leaders among a database of 8,000 companies.
Garmin has a ROIC of about 33%, triple the median of companies that make up the S&P 500 index. Also, for every dollar in sales the company produces, it keeps 46 cents in gross profit, or what's left after paying for raw materials and manufacturing costs. Computer makers average about 35 cents and cellphone makers, about 37 cents. Even toy makers, whose cheap-to-build products need only giggle when you squeeze them rather than help you find your way home, manage gross profits of just 42 cents on the dollar.
It's interesting that the article touches on so many obscure things that GPS is being used for, but leaves out the bread-and-butter business for Garmin. Their avionics business is going strong, with high margins, and remarkably little in the way of competition on the way.
posted by gab admin at 8:28 AM 
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