Garmin Facing Price Competition, But Valuation is Compelling

4/3 - "To me, this looks like the hi-tech version of the old "which came first" puzzler. Are lower prices driving PND sales growth, or are the economies of scale that arise from enormous PND sales enabling Garmin and its rivals to cut prices? Seems to me we have a bit of both going on. As a result, it seems inevitable that Garmin's profits will not grow as fast as its sales, because each additional unit sold is being sold at a lower profit margin than the unit preceding. Add to this Rauckman's assertion that he aims to hold the line on U.S. market share and compete for additional share abroad, and you've got a second reason for Garmin's margins to fall: Price competition."

"As of this writing, Garmin sells for 14 times its trailing-12-month earnings. Analysts, despite getting more pessimistic about its prospects by the day, still expect Garmin to grow its earnings...