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Why Shares of Garmin Ltd. Were Heading North

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 Garmin Ltd.  (NASDAQ: GRMN  ) were navigating higher today, climbing as much as 12% on a strong fourth-quarter earnings report.

So what: The maker of GPS devices and other gadgets posted a profit of $0.76 a share, ahead of expectations of $0.62. Revenues dipped slightly, falling 1.1% to $759.7 million, but that was much better than expectations of $712.8 million. Despite the secular decline in personal navigation devices, Garmin has found stability in its outdoor, fitness, aviation, and marine segment, sales of which grew 14% in the quarter.  That shift has enabled gross margins to expand, lifting profit from $0.68 a year ago to $0.76.

Now what: Garmin shares hit a 52-week high on the news, and the company plans to up its already strong dividend by 6.7%. Further instilling investor confidence was the company's outlook, which projects revenue of $2.6 billion to $2.7 billion, and EPS of $2.50-$2.60 for 2014. Analysts had been eyeing sales of $2.58 billion on EPS of $2.56. While Garmin's strong growth days are clearly past it, the company seems to have found its niche in specialized navigation devices and, with its near-4% dividend yield and share buybacks, the stock looks like a solid value play for the foreseeable future. 

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  • Report this Comment On February 21, 2014, at 9:04 AM, marmurphy wrote:

    I remained a loyal investor because I could see their efforts to find alternatives to car GPS devices. I must say the vast majority of individuals giving so called expert opinion were giving flippant analysis like "car GPS in trouble --- Garmin finished". Even right now financial commentators are still talking about the possibility of Apple coming up with a smart watch. Garmin has smart watches for years.

    Do does experts ever say "I was absolutely wrong"

    John Murphy

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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9/1/2015 3:59 PM
GRMN $36.81 Down -0.80 -2.13%
Garmin CAPS Rating: *