Bristol Gate Capital Partners Inc. on Garmin Ltd.
Thesis
Bristol Gate initiated Garmin as a diversified, vertically integrated GPS-device and software business with an established engineering culture. Leadership in aviation and marine offsets the more cyclical fitness and outdoor categories, while the Garmin Connect ecosystem strengthens repeat customer engagement. Ownership of its hardware design, software and manufacturing helps Garmin control quality, cost and delivery times. It carries no debt, holds around $4.4 billion of cash and marketable securities, and earns high returns on capital. Bristol Gate expects smartwatch share gains, a richer services mix and new categories to drive resilient free cash flow and further dividend growth.
“We believe share gains in smartwatches and a growing mix of higher-margin services, with new product categories adding further room to grow, will drive resilient free cash flow and support continued high dividend growth.”
Key risks
- Fitness and outdoor product demand is cyclical.
- Future growth depends partly on successfully extending product categories and maintaining smartwatch share gains.