Garmin's (NASDAQ:GRMN) business is firing on all cylinders. The GPS navigation specialist just announced impressive results for its fiscal first quarter, which runs through late March. Sales jumped, profitability expanded, and earnings spiked thanks to strong demand for its portfolio of smartwatches, fitness trackers, and marine and aviation navigators.

Let's look at why that news should have investors considering buying this stock even though management left its broader 2021 growth outlook unchanged.

A woman wearing a mask checks the wearable device on her wrist

Image source: Getty Images.

A portfolio that works

Sales were strong across the board with revenue spiking in the fitness, outdoor, and marine categories. Garmin even notched a second consecutive quarter of growth in its automotive segment, which had previously been shrinking for years. The aviation division declined by 8% due to a difficult comparison in the year-ago quarter, but gains elsewhere allowed overall revenue to rise 25% to $1.07 billion.

Executives credited a flood of popular product launches in the smartwatch, fitness, and outdoor enthusiast arenas for helping lift sales. It's an ideal selling environment as much of the country emerges from the pandemic too. "Interest in fitness, health, and active lifestyle products has never been higher," CEO Cliff Pemble said in a press release.

Sparkling margins

Garmin had warned investors to brace for lower profitability this year, but there was no evidence of that slump in Wednesday's report. Gross profit margin ticked up to 59.8% of sales from 59.2% a year ago. Operating income jumped to 23.3% from 20.7% thanks to restrained advertising and selling expenses.

These trends combined to power an increase in earnings as operating income rose 41% year over year to $250 million. Operating cash flow was another piece of good news as it improved by 63% to $368 million. It's a testament to the strength of Garmin's portfolio that it could achieve these financial wins even as the aviation niche, its most profitable, shrank during the quarter.

Looking ahead

Investors might have been disappointed that Pemble and his team simply affirmed their outlook for the year. After a strong start to fiscal 2021, Wall Street analysts were likely hoping to see the company raise its guidance.

But the next few months are probably going to be volatile for consumer sales thanks to the waning of the pandemic threat. And Garmin is going up against some difficult comparisons with 2020, which saw an 11% sales boost despite a global retailing pause early in the year.

Management's outlook still calls for solid growth as sales rise to $4.6 billion, up from $4.2 billion last year. That would mark the company's sixth straight year of top-line growth. Earnings will follow last year's 16% uptick by holding roughly steady, Garmin said, as the company invests more cash in research and development and works to consolidate the market share gains it has made in the past few years.

That modest profit slowdown shouldn't worry investors, though, especially given that Garmin will be paying a 10% higher dividend. That extra income, plus the company's proven knack for staying ahead of consumer technology trends, should support market-beating returns for investors who hold onto this growth stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.