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Why Shares of Garmin Plunged 10.8% in May

By Travis Hoium - Jun 6, 2019 at 11:39AM

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First-quarter results were good but investors are anxious about the rest of 2019.

What happened 

Shares of Garmin (GRMN 3.24%) fell 10.8% in May, according to data provided by S&P Global Market Intelligence, after the GPS specialist reported earnings early in the month. At the end of the day, it was 2019 guidance that underwhelmed investors. 

So what 

First-quarter revenue increased 8% to $766 million and earnings per share jumped 7% to $0.73. Results topped analyst expectations for $731 million in revenue and $0.71 in earnings per share, but the rest of the year doesn't look as bright as investors had hoped. 

Five Garmin smartwatches

Image source: Garmin.

Management said they expect full-year revenue of $3.5 billion and $3.70 in EPS. That fell short of analysts' forecast for revenue of $3.53 billion and $3.75 per share in earnings. 

Now what 

The guidance miss is relatively small, so it seems like investors are overreacting a little. Companies like Garmin rely heavily on the holiday season, and it's difficult to predict what demand will look like this far in advance. Management may be setting goals they think they can hit. As long as the company is growing and holding its own in the smartwatch market, I think it will be a solid stock for investors. 

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