Shares of GPS specialist Garmin (NASDAQ:GRMN) are rocketing toward the stratospheric heights of the satellites that support its business, rising for the second straight day for a total of about 15% in gains. What's got investors so hot for the gadgeteer? That's what we're here to find out. First, the highlights:

  • Sales for the second quarter leapt 72% year over year, powered by, well, powered vehicle sales. GPS units sold for use in automobiles fell a hair short of doubling, while marine segment revenue ran up 59%.
  • The firm's greatest growth came right here at home, as U.S. sales tracked automobile sales and rose 95%. (Not that European or Asian performance was shabby by any measure. Both experienced greater than 40% sales growth.)
  • Earnings per share climbed 75% higher to $0.98.
  • Margin concerns subsided as operating margins widened by 140 basis points, allowing Garmin's profits growth to exceed that of its sales.
  • U.S. market share sits at 50%.

Little wonder, then, that CFO Kevin Rauckman pronounced himself "pleased with our financial results for the second quarter." And I have to wonder whether the purveyors of Garmin's products here in the States -- retailers such as Cabela's (NYSE:CAB) and Circuit City (NYSE:CC), Best Buy (NYSE:BBY) and Target (NYSE:TGT) -- will be similarly pleased by their profits from Garmin's success.

So what's not to like?
It was, indeed, an all-around fabulous quarter. About the only downside I see was the fact that free cash flow didn't do nearly as well as did reported GAAP profits. At $154 million for the quarter, it rose nearly 140% in comparison to last year's Q2. Still, these "cash profits" amounted to only 72% of reported net income for the quarter.

Yet even that nitpicking fails to shred Garmin's results. You see, in the portion of the press release that investors tend to gloss over (the one devoid of numbers), we learn that Garmin "completed the build-out of our second Taiwan manufacturing facility," "purchased and began build-out of our third Taiwan facility in Linkou," and began "work to expand our North American warehouse in Olathe, Kansas." Not only do these developments speak to management's confidence in future sales growth, they also explain where all the free cash went. At just less than $100 million, capex increased more than eightfold in comparison to last year's Q2.

While that certainly depressed free cash flow this quarter, these investments will facilitate the generation of gobs of greenbacks in the future. Well done, Garmin.

Surprised by Garmin's success? Wall Street certainly was, but Motley Fool Stock Advisor members might have seen this one coming based on the upbeat conversation we had with Rauckman last year. Get full Foolish access to the unabridged interview when you try out Stock Advisor free for 30 days. Garmin and Best Buy are Stock Advisor picks.

Fool contributor Rich Smith does not own shares of any company named above. Cabela's is a Hidden Gems pick. The Fool's disclosure policy would stop and ask for directions if it ever got lost, but it doesn't.