G. Stocks

The goal of this blog is to act more as a stock research reference web site. I've always had an interest in the stock market and have purchased many different stocks over the years. Now I'd like to take it to the next level.

Wednesday, November 15, 2006

Give Me Some More Numbers about Garmin!

Today we're going to review the spreadsheet I commonly create when analyzing a company. A link to the spreadsheet can be found here. It does require a google account but it's currently the best place I've found to store documents like this. This specific spreadsheet is for Garmin. The first page basically includes a summary of numbers which can be gleamed from the annual report. The second page, titled "Calcs" is where I calculate the numbers interesting to me.

Here's a brief breakdown of what I track and the values for Garmin in 2005.

Return on Equity (ROE) - 26.89%

Simply put, return on equity is a percentage which represents the amount of money the company made in the current year vs the stockholder equity a company has. Stockholder equity is the amount of money the company made selling stock and all earnings it has retained for re-investment in itself. For example, if a company has 10 billion dollars in stockholder equity and made 1 billion in net earnings, it would have a ROE of 10% (Net Earnings / Stockholder Equity).

This number can be used by an investor to understand how well management is using the resources provided by the shareholder to make money.

Retention Rate - 82.65%

Retention rate is a percentage which informs you of how much of net earnings are being put back into the company versus paid out as dividends to the stock owners. This percentage tends to decrease as a company slows down it's growth rate and pays more money back to it's shareholders.

Reinvestment Rate - 22.23%

Reinvestment rate is equal to the return on equity multiplied by the retention rate. It is used by analysts to calculate a companies growth potential. To increase it a company either needs to plow more of its net earnings back into itself (implying more growth) or by increasing net earnings to the point where it increases ROE.

Return on Assets - 22.85%

Return on assets is simply net earnings divided by total assets. It's similar to ROE but it doesn't include outstanding liabilities (money the company owes) in it's calculation. The difference between return on assets and return on equity can give you a quick feel for how much the company has in liabilities.

Operating Profit Margin - 32.90%

Operating profit margin is equal to the operating profits divided by the total sales. Operating profit is just net earnings before you take off taxes. This number tells an investor how profitable a company's products are to create and sell.

Net Profit Margin - 29.30%

Net profit margin is simply the net earnings divided by total revenue. Total revenue includes money made from sales and other income (investments and dollar fluctuations). This basically shows the bottom line on how much a company makes after it pays all of it's bills.

Percent Increase in Sales - 34.78%

A comparison of how much sales increased from the previous year. Obviously another very good way to gauge company growth.

Percent Increase in Net Earnings - 51.30%

A comparison of how much net earnings increased from the previous year. Please see previous blog post for reference on why this number is so high relative to the percent increase in sales.

Once again, all of these numbers are stellar! The three quarters reported for 2006 so far have shown the same growth numbers.

Good to see the fools have my same feelings about garmin as well :)


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