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Why Garmin Stock Popped Today

By Steve Symington – Updated Apr 16, 2019 at 5:19PM

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The GPS tech leader ended 2018 on a high note.

What happened

Shares of Garmin (GRMN 1.37%) jumped 17% on Wednesday after the GPS technology company announced better-than-expected fourth-quarter 2018 results and upbeat forward guidance.

Garmin's quarterly revenue climbed 4% year over year to $932 million, translating into a 26% increase in pro forma earnings to $193.6 million, or $1.02 per share. Analysts, on average, were only expecting earnings of $0.80 per share on revenue of $891.3 million.

Colorful stock market charts indicating gains

Image source: Getty Images.

So what

Within Garmin's top line, a 28% decline in automotive segment revenue (to $147.6 million) was more than offset by a combined 13% increase from its aviation, marine, outdoor, and fitness products. In particular, outdoor product revenue climbed 25% thanks to "significant contributions" from the company's adventure watch lines.

CEO Cliff Pemble called it a "remarkable year of revenue and operating income growth," and added: "Entering 2019, we see many opportunities ahead and believe that we are well positioned to seize these opportunities with a strong lineup of products across all of our segments."

Check out the latest Garmin earnings call transcript.  

Now what

For full-year 2019, Garmin expects revenue of $3.5 billion, up from $3.35 billion in 2018 and well above consensus estimates for $3.43 billion, assuming automotive declines will only partially offset growth from its remaining segments. That should translate into 2019 earnings per share of $3.70, up slightly from pro forma earnings of $3.69 per share in 2018 but again well above the $3.52 per share Wall Street was modeling.

In the end, while Garmin's consolidated growth isn't exactly dropping any jaws, this was a straightforward quarterly beat followed by encouraging guidance relative to expectations.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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