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Garmin Ltd. (GRMN) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Garmin Ltd. (GRMN)

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Intrinsic Value (DCF)

Current$212.60
→
Intrinsic$173.41
-18%
$121.42$173.41$272.17
Market implies 22% growth for 5 years
GRMN trades at a premium to our conservative estimate — investors expect above-average performance.
At $213, the market prices in continued strong cash flow growth (22%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $121 → Bull $272. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →12%14%16%18%
8%$208$225$243$262
10%$149$161$173$187
12%$117$126$135$145
14%$97$104$111$119

Bull Case

  • Bull case ($272) offers 28% upside at 20% growth, 9% discount

Bear Case

  • Bear case ($121) implies 43% downside at 13% growth, 12% discount
  • Price reflects 22% growth expectations vs 16% historical — high bar to clear
  • Trading 18% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$1.44B
Year 2$1.68B
Year 3$1.96B
Year 4$2.28B
Year 5$2.65B
Terminal$39.06B

📐 Model Inputs

Growth Rate16.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.24BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is GRMN stock undervalued or overvalued?
🔴 OVERVALUED

GRMN trades at $212.60 vs. our DCF-derived intrinsic value of $173.41, implying -17% downside. Using a 10.0% WACC and 16.5% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($249.86) suggests limited upside.

What is GRMN's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.24B, projected at 16.5% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-1.92B net debt and dividing by 0.19B shares: Bear $120.15 | Base $173.41 | Bull $249.86. Current price $212.60 implies -17% to base case.

How is GRMN's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 16.5% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($31.63B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 25.5x.