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Valued at a market cap of $41.2 billion, Garmin Ltd. (GRMN) is an original equipment manufacturer of navigation and communication equipment that incorporates the global positioning system (GPS)-based technology. The Schaffhausen, Switzerland-based company’s diverse portfolio of handheld, portable, and fixed-mount GPS-enabled devices provides geographical location and navigation data using the GPS satellite system.
Shares of this tech company have significantly outpaced the broader market over the past 52 weeks. Garmin has rallied 98% over this time frame, while the broader S&P 500 Index ($SPX) has gained 22.7%. Moreover, on a YTD basis, the stock is up 17.3%, compared to SPX’s 4.5% rise.
Narrowing the focus, Garmin’s outperformance looks even more pronounced when compared to the Technology Select Sector SPDR Fund’s (XLK) 19.6% return over the past 52 weeks and 4.2% gain on a YTD basis.
On Feb. 19, shares of Garmin skyrocketed 12.6% following its better-than-expected Q4 earnings release. The company delivered Pro Forma EPS of $2.41, which improved 40.1% from the year-ago quarter and easily topped the Street’s expectations of $2.05. Moreover, its revenue grew 23% year-over-year to $1.82 billion and outpaced the forecasted figure by a notable margin of 7.1%.
Growth was seen across all business segments, with the fitness segment leading at 31%, driven by the successful launch of the Lily 2 Active smartwatch, followed by a 29% increase in the outdoor segment. Additionally, Garmin strengthened its gross and operating margins, further enhancing its performance.
Looking ahead to fiscal 2025, Garmin projects steady growth, with expected revenue of approximately $6.8 billion and a Pro Forma EPS of $7.80, reflecting a strong outlook. This might have further bolstered investor confidence.
For the current fiscal year, ending in December, analysts expect Garmin’s EPS to grow 5.6% year over year to $7.80. The company’s earnings surprise history is promising. It exceeded the Wall Street estimates in each of the last four quarters.
Yet, among the six analysts covering the stock, the consensus rating is a “Hold,” which is based on one “Strong Buy,” two “Hold,” one “Moderate Sell,” and two “Strong Sell” ratings.
On Dec. 16, Tigress Financial maintained a “Strong Buy” rating on Garmin and raised its price target to $265 - the Street-high price target, which indicates a 9.5% potential upside from the current levels. As of writing, the company is trading 21.2% above its mean price target of $199.60.
