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Why Garmin Stock Rose 11% in May

By Demitri Kalogeropoulos – Jun 4, 2020 at 9:23AM

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The GPS device maker entered the COVID-19 crisis with plenty of positive momentum.

What happened

Garmin (GRMN -0.82%) shareholders outperformed a rallying stock market last month. Shares rose 11% in May compared to a 4.5% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The uptick put shares at roughly even through the first five months of 2020 despite having been lower by 36% in mid-March.

A hiker consults her GPS watch while in the mountains.

Image source: Getty Images.

So what

Investors celebrated the GPS device giant's first-quarter earnings report, which on April 29 revealed solid momentum heading into the COVID-19 crisis. Revenue rose 12% overall as popular launches in its fitness and smartwatch categories more than offset continued declines in automotive navigation. Garmin's booming marine and aviation segment, meanwhile, helped push profitability to new highs, leading to a 17% spike in operating income. 

Now what

CEO Cliff Pemble and his team withdrew their 2020 guidance while warning that the COVID-19 situation would surely affect its short-term results. Investors will see those pressures when the tech specialist makes its next earnings update in late July.

Over the long term, though, executives say they're optimistic about an eventual return to normal. Three consecutive years of strong sales growth, hit product launches, and improving profit margins support that bullish reading of Garmin's business.

Demitrios Kalogeropoulos 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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Garmin Ltd. Stock Quote
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