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Garmin's Comeback: Outrunning Apple's Shadow
25 Sep
Summary
- Garmin's stock price has risen nearly 25% this year.
- Fitness segment revenue grew 25% last quarter.
- The company holds significant net cash and minimal debt.
Garmin Ltd. has demonstrated a remarkable resurgence, defying the common perception that Apple had overtaken its market share in fitness wearables. The company's stock has climbed by approximately 25% this year, reflecting a solid financial performance. Revenue has grown by around 14% over the past twelve months, with profits increasing by nearly 20%.
The fitness segment, a key driver of this growth, experienced a 25% revenue increase last quarter. This division now generates more operating profit than Garmin's aviation and marine sectors combined, boasting impressive margins of over 35%.
Beyond fitness, Garmin's aviation and marine divisions also show strength, each earning close to 30 cents on the dollar. The company has strategically expanded its marine offerings, introducing an autopilot system for sailboats, focusing on higher-value products.
Garmin's financial health is robust, with significant net cash reserves and negligible debt. Despite its strong performance, the market appears to be pricing in minimal future earnings growth, with analysts largely maintaining a 'hold' rating. Hedge fund holdings also saw a notable decrease recently.
