Garmin Races Up 17% On Strong Q4, Driven By Fitness, Outdoor

By | February 17, 2016

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Outdoor, fitness and navigation technology company Garmin ( GRMN ) surprised Wall Street on Wednesday with better-than-expected fourth quarter results, sending its shares almost 17% higher. The Olathe, Kans.-based firm earned 74 cents a share on sales of $781 million for the quarter ended Dec. 26. Analysts polled by Thomson Reuters expected Garmin to earn 48 cents a share on sales of $760 million. On a year-over-year basis, EPS and sales were down 4% and 3%, respectively, as Garmin’s once-core automotive GPS navigation device business continues its secular decline. The company’s auto segment sales fell 21% year over year to $268 million in Q4. Garmin’s top-performing segment was fitness devices, with sales rising 14% to nearly $229 million. Garmin’s outdoor segment sales rose 6% to almost $124 million. Aviation segment sales jumped 12% to $104 million. Marine segment sales climbed 8% to $56 million. Garmin stock rose 16.6% to 41.06 on the stock market today after the company announced Q4 earnings. On a conference call with analysts, Garmin CEO Cliff Pemble said the company’s investments to diversify from personal navigation devices are paying off. Excluding the auto segment, sales grew 11% year over year. The aviation, fitness, marine and outdoor segments together contributed 66% of revenue in Q4. In the fitness device market, Garmin dominates the high-end running and sports watches segment. But it has been competing more with Fitbit ( FIT ) and others in the activity tracker business. William Blair analyst Jonathan Ho reiterated his outperform rating on Garmin stock. Garmin’s 2016 guidance was a “source of relief” for investors, Ho said. Its full-year sales target of $2.82 billion was slightly above Wall Street’s consensus. But its EPS goal of $2.25 was 5 cents below consensus. Garmin also announced plans to maintain its current quarterly dividend of 51 cents a share over the next four quarters. “These results were better than investors feared, given the global macroeconomic challenges, competition, pricing pressure and currency headwinds that the company faced,” Ho said. “We were impressed by a solidly executed quarter that led revenue and EPS to be meaningfully above expectations and a solid guide that takes into account a still-challenging environment.”   Scalper1 News

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