Garmin (NASDAQ:GRMN) shares fell in the wake of its fourth quarter earnings report on Wednesday, closing down nearly 11%. Although revenue exceeded expectations, its earnings per share and 2015 outlook fell short of analyst projections.

Garmin posts strong revenue
In the fourth quarter, Garmin earned an adjusted $0.77 per share on revenue of $803 million. Both figures were up from the same quarter last year. On an annual basis, revenue rose 6%, while its adjusted earnings per share jumped 1%.

But earnings fell short of analyst estimates, though its revenue came in stronger than anticipated. Analysts had been expecting Garmin to earn $0.78 on revenue of around $790 million. 

But outlook falls short
The sell-off in Garmin, however, was likely fueled more by the future outlook than its recent performance. In 2015, Garmin expects to earn $3.10 per share on revenue of about $2.9 billion. Analysts, in contrast, had been anticipating earnings per share of $3.24 on revenue of roughly $2.92 billion.  

GPS contracts, fitness grows
The fourth quarter reinforced many of the trends that have been affecting the Garmin business in recent months: Its core auto/mobile division declined, while its fitness category posted strong revenue growth.

The steady proliferation of GPS-equipped smartphones has taken a toll on Garmin personal navigators and automotive GPS systems -- sales in the fourth quarter fell 11% year-over-year. This was hardly a surprise, however, as management is well aware of the challenges the segment faces and has been projecting steady annual declines of 10% to 15% for some time.

In contrast, consumers cannot get enough of Garmin fitness gadgets. In addition to its GPS units, Garmin offers a number of high-end watches and smart bands that give athletes the ability to track their activity and vitals. In the fourth quarter, fitness-related revenue rose an impressive 70% year-over-year and now represents about one-quarter of total sales.

Garmin remains committed to the category and expects it to remain the key growth driver in 2015. It continues to invest in new products, but they could face some intense competition in 2015 -- most notably from the forthcoming Apple Watch.

Other product categories were less notable, though they did collectively generate just over one-third of the top-line in the fourth quarter. Revenue from the outdoor category fell 8%, as demand for its golf-related products came under pressure. Aviation, in contrast, enjoyed revenue growth of 7%, as airplane manufacturers purchased more of its aviation systems. Its marine business is its smallest segment -- representing just 6% of revenue -- but it enjoyed solid growth, jumping 18% year-over-year, boosted by strong demand for the Garmin Chartplotter.

The Garmin story remains unchanged
Though the business, as a whole, is not posting much growth, Garmin remains a reliable dividend payer. After tumbling today, Garmin shares are now yielding around 3.8% and should be able to maintain that dividend for quite some time, as almost one-third of market cap is in cash.

The decline in Garmin shares is excessive relative to the results. Rather than a major shift in its business, the fourth quarter proved to be much of the same. The GPS segment is in inexorable decline, but its fitness wearables are seeing strong growth. Investors that liked Garmin yesterday could use the weakness as a buying opportunity.