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Garmin and O-I Glass have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – May 30, 2024 – Zacks Equity Research shares Garmin Ltd. GRMN as the Bull of the Day and O-I Glass, Inc. OI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Axis Capital Holdings Ltd. AXS, Radian Group RDN and RenaissanceRe Holdings Ltd. RNR.

Here is a synopsis of all five stocks:

Bull of the Day:

Garmin Ltd. soared after the standout GPS maker posted blowout earnings for the second period in a row in early May.

Garmin's top and bottom-line growth outlook is stellar as it benefits from its expanding reach across wearables, aviation, boating, and beyond.

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Garmin stock has outpaced the Zacks Tech sector during the past 20 years, yet it still trades roughly 10% below its 2021 peaks even as many tech names constantly post new highs.

Fitness Wearables to Aircraft Autopilot Systems

Garmin helped kick off the modern consumer-facing GPS movement over 30 years ago. The goal was to integrate GPS technology into navigation devices for multiple markets. GRMN became a household name for many in the mid-2000s as in-car navigation systems took off. Others might think of Garmin as a fitness wearables and smartwatch firm.

Garmin's fitness wearables and smartwatches have grown in popularity despite challenges from Apple and others. GRMN continues to roll out an array of offerings in this hot space that has plenty of runway remaining. Garmin posted 40% revenue growth in its fitness unit last quarter, driven by elevated demand for "advanced wearables."

Fitness accounted for roughly 25% of first quarter 2024 sales. Garmin's outdoor unit jumped 11% in Q1 as demand for its advanced handheld GPS systems and wearables climbed to make up 27% of total revenue (the most of its five reported segments).

GRMN's portfolio spans far beyond its more consumer-heavy efforts. The Switzerland-headquartered firm is an innovator across aviation and marine, rolling out various cutting edge and essential technologies. Garmin makes sonar, radars, autopilot systems, and other crucial and cutting-edge tech for various types and sizes of boats.

Meanwhile, its aviation business spans general, business, government & defense, helicopters, and experimental aircraft, with offerings such as flight decks & displays, autopilot, navigation & radios, and much more.

GRMN's aviation unit popped 2% in the first quarter (16% of revenue), while marine jumped 17% on the back of its JL Audio acquisition (making up 24% of sales). Garmin's auto OEM unit soared 58% last quarter, fueled by large shipments to BMW.

Growth Outlook

Garmin posted record first-quarter revenue across four of its five segments helping boost total sales by 20%. This came after GRMN's 8% top-line expansion in 2023 following a small 2.5% downturn in 2022. The company averaged 14% revenue growth between 2019 and 2021.

Garmin's top-line strength and improving margins helped it boost its adjusted first quarter earnings by 39% to beat our bottom line estimate by 42%. The company's earnings outlook has soared since its May 1 release, especially for 2025.

GRMN's FY25 consensus EPS estimate for FY25 has popped nearly 11% since its report. Garmin's most accurate/recent EPS estimates topped our current consensus for both FY24 and FY25 to help it land a Zacks Rank #1 (Strong Buy).

Garmin is projected to post 13% revenue growth in 2024 and 9% higher sales next year to help boost its bottom line by 3% and 13%, respectively.

Other Fundamentals

Garmin has climbed 26% YTD, including a 12% run since its May report. The stock has surged roughly 54% in the last two years to match the Zacks tech sector. Even though GRMN has skyrocketed over 100% off its October 2022 lows, it still trades around 10% below its 2021 peaks.

Garmin has pulled back since its post-release pop to trade slightly below its 21-day moving average. The stock also fell from heavily overbought RSI levels to below neutral. GRMN might face more near-term profit-taking to help it cool down following its run.

Yet, Garmin appears to be starting what could be a long-term ride higher to reach new all-time highs since it recently experienced a long-term golden cross, with the 50-week trendline passing above the 200-week.

On the valuation side, Garmin trades at a slight discount to the Tech sector at 26.7X forward 12-month earnings. GRMN is trading at a 15% discount to its highs.

Garmin pays a dividend that yields 1.80% at the moment. GRMN plans to raise its dividend payout if shareholders approve the measure at its annual meeting on June 7. On top of that, GRMN in February authorized a $300 million share repurchase program.

Bottom Line

Garmin's stellar balance sheet, which includes $2.20 billion in cash and equivalents and $8.6 billion in total assets vs. $1.4 billion in total liabilities and zero debt, helps support buybacks and its dividend.

Garmin remains a major player in consumer-facing segments despite mounting competition because its offerings are often best-in-class. The company is also a standout across aviation and marine, with the ability to innovate in-house and through acquisitions.

Bear of the Day:

O-I Glass, Inc. is a leading producer of glass bottles and jars. The stock has tumbled since last summer alongside its fading earnings estimates.

O-I's earnings outlook took another turn for the worse following its Q1 2024 release at the end of April.

O-I Glass 101

O-I Glass is a leading producer of glass bottles and jars. The firm works with some of the top food and beverage brands across many different regions throughout the world.

O-I's business is hardly flashy, but it is not going out of style since glass is one of the most sustainable rigid packaging materials. The Ohio-based firm operates 68 plants across 19 countries.

O-I Glass posted a strong three-year stretch of earnings and revenue expansion between 2021 and 2023. It ended 2023 on a downbeat note in the fourth quarter and its Q1 2024 revenue fell 13% YoY. The drop in sales reflected "slightly lower average selling prices and a 12.5% decline in sales volume."

O-I's adjusted earnings tumbled from $1.29 per share in the year-ago period to $0.45 a share. O-I's consensus earnings estimate for 2024 has tumbled 29% since its Q1 release, with its FY25 outlook 21% lower.

The recent downward revisions are part of a year-long trend that's seen its FY24 consensus slide 40% from $3.09 to its current $1.67 a share. O-I's overall EPS revisions trends help it earn a Zacks Rank #5 (Strong Sell).

O-I is projected to post a 1% drop in 2024 sales and 46% lower adjusted earnings. "Lower results primarily reflected the current market downturn that has impacted shipment levels due to softer consumer consumption and inventory destocking across the value chain," CEO Andres Lopez said in prepared remarks.

Bottom Line

O-I stock has fallen 45% since July 2023, including a 23% YTD drop. O-I is also down 60% during the past decade to lag far behind the Zacks Industrial Products sector's 63% climb. The stock is trading below its 50-week and 200-week moving averages.

That said, O-I is trading near historically oversold RSI levels. O-I's chief executive said last quarter that it saw a "gradual improvement in our year-over-year glass shipment trends since the fourth quarter of 2023." Still, it might be best to stay away from O-I until it proves a turnaround is around the corner.

Additional content:

3 Insurance Stocks to Watch on Share Buyback Spree

An effective and prudent way to increase shareholders' wealth is by buying back shares. Companies often use funds to buy back shares from the open market to lower the number of outstanding shares. This helps boost the bottom line, in turn enabling the distribution of more profits to shareholders.

Here we focus on three insurers — Axis Capital Holdings Ltd., Radian Group and RenaissanceRe Holdings Ltd. — whose board of directors recently approved new share buyback programs, banking on the confidence that the companies' operational expertise will boost liquidity. Companies generally repurchase their own stock when they are undervalued, as it enables them to buy back more shares.

Stocks in Focus

Axis Capital is a leading specialty insurer and global reinsurer aiming for leadership in specialty risks. Its board of directors recently approved a $300 million share repurchase program. This is in addition to the previously approved $100 million share repurchase program. This Zacks Rank #3 (Hold) insurer bought back $76 million worth of shares in the first quarter of 2024 and another $2 million worth of shares in April.

Axis Capital has an impressive history of distributing wealth to shareholders via dividendsand share buybacks. While the insurer prioritizes investing in growth initiatives that ramp up specialty businesses, it has also hiked its dividend for 18 consecutive years. The insurer boasts one of the highest dividend yields among its peers.

Its focus on specialty lines, continuous investment in growth areas, including wholesale insurance and lower middle markets, exit from the volatile catastrophe and property reinsurance space and reduction of risk exposure while concentrating on accident and health, casualty, credit and surety, and specialty reinsurance lines should help the insurer deliver impressive results. This, in turn, should poise the company well with sufficient liquidity and aid in boosting shareholders' value. It has a VGM Score of B. The expected long term earnings growth is pegged at 25.2%. Shares gained 29.1% year to date.

Radian Group is a credit enhancement company providing a suite of private mortgage insurance and related risk-management products and services. The board increased the authorization by $600 million to $900 million. The program remains active through Jun 30, 2026. This Zacks Rank #2 (Buy) mortgage insurer bought back 1.8 million shares worth $50 million, including commissions, in the first quarter of 2024.

Radian Group maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps Radian deploy capital via share repurchases and dividend hikes that enhance shareholders' value. Radian declared a 9% increase in its quarterly dividend in the first quarter of 2024. This is the fifth consecutive year where RDN has increased the quarterly dividend with a total increase of 96% over the past four years. Its current dividend yield of 3.1% betters the industry average of 2.5%.

An improving mortgage insurance portfolio, declining claims, a well-performing homogeneous segment and a solid capital position should help the insurer deliver impressive results. This, in turn, should poise the company well with sufficient liquidity and aid in boosting shareholders' value. It has a VGM Score of B. The expected long term earnings growth is pegged at 5%. Shares gained 7.5% year to date.

RenaissanceRe primarily provides property-catastrophe reinsurance to insurers and reinsurers globally on the basis of excess of loss (coverage of losses over a specified limit). Its board approved a renewal of the authorized share repurchase program, bringing the total current authorization to $500 million. It carries a Zacks Rank #3.

RenaissanceRe boosts shareholder value by banking on its ability to generate free cash flow. It has been raising dividends for the past several years and is expected to keep doing so. In February 2024, the company's board of directors approved a 2.6% hike in the quarterly dividend. The increased dividend marked the 29th straight year of a dividend hike. Its dividend yield of 0.7% remains higher than the industry average of 0.3%.

Improving premiums in specialty lines given market dislocation and rate increases, higher demand for reinsurance in Florida, and the acquisition of Validus Re, AlphaCat and the Talbot Treaty reinsurance business from AIG enhance the scale of its global property and casualty reinsurance business. These also boost profitability and lower exposure to uncertain lines such as D&O insurance. It has a VGM Score of B. The expected long term earnings growth is pegged at 4%. Shares gained 16.8% year to date.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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O-I Glass, Inc. (OI) : Free Stock Analysis Report

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Radian Group Inc. (RDN) : Free Stock Analysis Report

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