Shares of Garmin (NASDAQ:GRMN) jumped on Wednesday after the GPS and wearables company reported solid fourth-quarter results. Garmin handily beat analyst estimates for both revenue and earnings, driven by strong growth in non-auto products. Garmin stock was up as much as 10.5% Wednesday morning, settling to a 7.7% gain by 11:30 a.m. EST.
Garmin reported fourth-quarter revenue of $861 million, up 10% year over year and $64 million higher than the average analyst estimate. Sales of automotive products slumped 17% to $227 million, but every other segment posted double-digit growth: outdoor revenue by 46% to $175 million, fitness revenue by 20% to $274 million, marine revenue by 19% to $67 million, and aviation revenue by 13% to $117 million.
Non-GAAP earnings per share came in at $0.73, down from $0.74 in the prior-year period but $0.16 better than analysts were expecting. Rising costs, particularly a 21.6% jump in research and development spending, an increase in interest expense, and a higher tax rate kept a lid on the bottom line.
CEO Cliff Pemble provided an optimistic outlook by saying:
2016 was a remarkable year of growth driven by strong sales in our outdoor, fitness, marine, and aviation segments. Entering 2017, we see additional growth opportunities ahead and we are well positioned to seize these opportunities with a strong lineup of great products.
Garmin expects to produce $3.02 billion of revenue in 2017, flat compared to 2016 due to continued decreases in the automotive segment. Non-GAAP EPS of $2.65 is expected, down from $2.83 in 2016. Garmin has made progress in diversifying into areas like fitness wearables in recent years, but a declining market for navigation devices is still holding the company back.
Investors shrugged off the poor guidance from Garmin, instead focusing on the fourth-quarter beat. With non-auto products representing a growing portion of Garmin's business, the market is giving the company the benefit of the doubt.