GPS-enabled device maker Garmin (GRMN 0.15%) let investors know that business is booming. Its fourth-quarter financial update and 2026 guidance helped the stock soar 25.4% in February, according to data provided by S&P Global Market Intelligence.
Even after a standout 2025 that will lead to tough comparisons this year, management is still predicting 9% growth. Investors can look at a history of conservative forecasts and conclude that double-digit growth is likely again this year, making Garmin stock a solid buy.
Image source: The Motley Fool.
Fitness rules
Garmin's fitness segment has grown to become its largest. After notching 42% year-over-year growth in Q4, the category has averaged 32% growth each quarter over the past two years. Garmin's fitness products include more than just smartwatches and other devices for running, cycling, golf, and other sports. It offers novel features in digital health and fitness. The company has enhanced its premium Connect+ offering with AI-powered nutrition tracking and insights to help users achieve nutrition and fitness goals.
Fitness isn't the only area where Garmin is thriving. The company achieved record revenue across all five segments last year, with aviation and marine also posting double-digit growth in the fourth quarter. For the full year, Garmin's revenue surged 15%, nearly double the 8% growth management originally predicted.
Shareholder friendly
That's more of a pattern than an anomaly. The 2024 revenue growth of 20% followed the company's initial estimate of 10% growth over 2023. Investors should factor management's historically conservative guidance into their decision on whether the stock is a good value. That helps explain why the stock jumped last month.
NYSE: GRMN
Key Data Points
Guidance for 9% revenue growth and slightly higher earnings per share (EPS) growth gives management confidence to boost returns to shareholders, too. It proposed to increase its quarterly dividend from $0.90 to $1.05 per share. That's a 17% boost.
The company itself thinks its stock is still a good buy, too. Garmin initiated a new $500 million share repurchase plan. That replaces the prior $300 million plan, which had only $56 million remaining.
There's no shortage of cash to accomplish both shareholder-friendly moves. Garmin generated $1.36 billion in free cash flow in 2025 and ended the year with about $4.1 billion in cash and marketable securities. With no debt on the balance sheet, investors should consider that financial strength when studying valuation.
Its forward price-to-earnings (P/E) ratio of 26 should be adjusted to reflect its cash position and management's tendency for conservative guidance. That would bring its effective P/E down to about 22, about 10% below its three-year average. That means Garmin shares still look like a good value today, even after the February surge.
