Garmin Ltd. GRMN has been making significant investments in the Aviation business, which helped it to develop a solid product line.
Apart from continuously expanding product line in the business, the company recently acquired Flight Plan LLC (FltPlan), a provider of leading electronic flight planning, scheduling, and trip support services.
However, the terms of the deal have not been disclosed yet.
Connecticut-based FltPlan is one of the largest flight planning companies in the world. It creates more than 6.3 million flight plans annually and has in excess of 165,000 registered users. It offers self-service flight management solutions as well as premium offerings, which are best suited for Business and General Aviation operators.
We observe that shares of Garmin have gained 31.5% in the past 12 months, outperforming the industry’s 13% rally.
Let’s take a look at how Garmin’s Aviation business is performing and how it is poised for the future.
Product Line Expansion in Focus
Overall, growth in both OEM and retrofit product categories is contributing significantly to Aviation segment revenues. The company is expanding the product line again this year. It recorded strong growth in ADS-B offerings and from recently introduced products such as the G5 indicator system, TXi displays, and GFC autopilots.
Garmin has been following a strategy to build a strong position for itself through product introductions, acquisitions and strategic partnerships. Individual and recreational purchases (retail sales) aside, it has also signed on some important accounts (OEMs).
The latest FltPlan deal will help the company further expand its offerings in aviation business. With compatible Garmin avionics, pilots can transfer flight plans from the FltPlan Go app into their avionics. In addition, flight plans created on the FltPlan website can also be transferred to the Garmin Pilot app.
To Conclude
Management focuses on continued innovation, diversification and market expansion to explore growth opportunities in all business segments. Product-line expansion remains the top priority for Garmin.
In the last reported quarter, Aviation segment revenues were up 5% sequentially and 23.3% from the prior-year quarter. The increase was mainly driven by new product introductions such as the G5 indicator system, TXi displays and GFCTM 500/600 autopilots.
Hence, it is clear that the company is on the right track with regard to its product offerings. Moreover, acquisitions definitely constitute judicious use of cash in our opinion.
Zacks Rank and Other Stocks to Consider
Garmin currently carries a Zacks Rank #2 (Buy).Other top-ranked stocks in the same industry include Infineon Technologies AG IFNNY, ON Semiconductor Corporation ON and Rambus Inc. RMBS, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Infineon Technologies, ON Semiconductor and Rambus is currently projected to be 7.5%, 13.2% and 10%, respectively.
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