This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.
Market expectations for a negative inflection in returns and growth appears too pessimistic, considering management’s successful pivot and growing confidence
GRMN is currently trading at a 13x UAFRS-based P/E (V/E’), which is near historical averages. At these levels, the market is pricing in expectations for UAFRS-based ROA to decline from 17% in 2016 to 11% by 2021, accompanied by 7% Adjusted Asset growth. These expectations imply the market believes the firm’s competitive advantage has completely dissolved, and the firm will see profitability fade towards historical corporate averages.