One of the big stories of last week was the news that action-sports camera maker GoPro is launching its highly anticipated IPO. GoPro has grown into a billion-dollar company by capturing a key niche market. The company that's not getting love that could see a bounce from a successful GoPro IPO is Garmin (NASDAQ:GRMN).

Garmin doesn't need cars to survive
Garmin is best known for its navigation products in automobiles. Those same devices have been replaced with smartphones that have built-in GPS and navigation guides with detailed directions. Garmin hasn't gone bankrupt and is still thriving, even though it has seen declining sales in its key business segment. As it enters its 25th year in business, Garmin's entries into outdoor cameras and other high-margin businesses will lead the company going forward.

In fiscal 2013, the automobile segment still contributed 49% of Garmin's sales, but this declined from 55% and 58% in the prior two years. Even though it made up nearly half of the company's sales, the automotive segment contributed only 33% of operating income.

In the first quarter of 2014, Garmin posted earnings per share of $0.55, an increase of 38%. The non-automotive segments made up 58% of Garmin's revenue. All of these segments also saw growth, and fitness had the biggest gain at 38%.

Outdoor segment
The company's outdoor segment saw revenue grow from $402 million to $411 million in fiscal 2013. The segment made up 16% of Garmin's total revenue, but contributed 28% of total operating income for the last full year. In the first quarter, the outdoor segment saw sales grow 10% to $84.0 million.

The outdoor segment could grow the most and is also the reason to follow Garmin's shares going into the GoPro IPO. Garmin took GoPro head-on in 2013 with the launch of its VIRB and VIRB Elite outdoor cameras. These cameras sell for $300 and $400, respectively. GoPro has three main cameras which sell for a range of $200 to $400. Garmin is ramping up its advertising and sponsorships to help support the brand. This is one of the biggest ways that GoPro became the market leader and took over. Garmin reminded investors of this in the first quarter, "We are determined to win market share in the category with an innovative products and future enhancements."

Taking on GoPro
Garmin faces the challenge of competing against GoPro, who has over 66% market share for pocket camcorders in the United States. GoPro also has a 45% market share of the global pocket camcorder market.

However, Garmin has a wider distribution channel thanks to its pre-existing business relationships with retailers for other devices. A search on Garmin's site revealed the VIRB found in RadioShack, Target, and Sears locations nearby. The same search for store locations selling GoPro cameras revealed only regional specialty sporting good stores. This wide release in stores like these three retailers could go a long way in slowly capturing market share. 

Other sites break down the differences  between GoPro and the Vibe. A Garmin Vibe features built-in GPS, Accellerometer, and video preview screen. None of the three GoPro cameras have these built-ins. GoPro does sell a video preview screen as an accessory. 

Garmin needs to start heavily advertising its device and exploit its key features and differences from GoPro. Garmin should also start looking for action sport stars to endorse to rack up YouTube views, an area where GoPro has excelled.

In the end, GoPro should continue to dominate the pocket camcorder market. However, a 66% U.S. market share seems unsustainable and Garmin should be able to eat into it. The growing pocket camcorder is plenty big for several players and Garmin's entry should see growth and help the company continue its diversification. 

Analysts are projecting earnings per share to hit $2.77 in fiscal 2014 and $2.94 in fiscal 2015. They expect revenue to rise only 2% in each of the next two years. Earnings per share projections call for 6% growth, which the company could easily beat with improving margins. Garmin believes its full-year operating margin will hit 21%, after it came in at 15% for the prior year. Garmin's shares are up 24% in 2014 after increasing only 10% in 2013. The shares trade near their 52-week high, but are well off their triple-digit highs seen in 2007.

The niche market of action-sports cameras continues to grow. High demand exists for these products and GoPro has been the market leader with a dominant position. Garmin's entry into the category has been slow-going, but could pick up. Garmin's transition from automobile to other segments is increasing its operating margin and bringing more money to the bottom line for shareholders. Investors may be ignoring the opportunities for Garmin in non-automobile markets.