February 22, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of personal navigation device (PND) maker Garmin (Nasdaq: GRMN ) climbed 10% on Wednesday after its quarterly results and full-year outlook topped Wall Street estimates.
So what: Garmin has struggled in recent years in the face of rising smartphone competition, but today's big fourth-quarter beat -- adjusted EPS of $0.96 versus the consensus of $0.64 -- suggests that its turnaround initiatives are gaining traction. Specifically, management's move of bundling its personal navigation devices with premium mapping services is fueling a return to top-line and margin growth.
Now what: Looking ahead, Garmin sees 2012 EPS of $2.45 to $2.60 on revenue of $2.8 billion, versus the Street's estimate of $2.49 on a top line of $2.56 billion. "While the PND market size continued to decline in 2011, we emerge from the year with increased market share, stabilizing ASPs and strong profitability," said CEO Dr. Min Kao. "In 2012, we will continue to focus on gaining market share and improved profitability." With the stock up more than 40% over just the past three months, however, much of that optimism already seems baked into the price.
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