This week witnessed Garmin's stock soaring to unprecedented heights.
Garmin, (GRMN -1.75%), has been on a roll lately. Known for its navigation devices back in the day, the company has transformed into a go-to brand for fitness enthusiasts, athletes, outdoor adventurers, and professionals in aviation and marine industries. This shift has opened up a lucrative market for the GPS-equipped device manufacturer, and its success story is far from over.
Following its jaw-dropping fourth-quarter and full-year 2024 earnings report, Garmin's shares soared to an all-time high. Although the stock has since dipped, it still managed to climb a whopping 6.8% this week, as reported by S&P Global Market Intelligence. And with an impressive 89% increase over the past year, Garmin's stock has been on a wild ride.
Planes, Boats, and Cars
Garmin wrapped up 2024 with a 20% surge in sales. Their stellar fourth-quarter report showed a 23% year-over-year revenue increase, along with expanding gross and operating margins. Boasting a substantial $3.7 billion in cash and marketable securities, Garmin was more than willing to up its quarterly dividend by a generous 20%. If approved by shareholders, shareholders could expect a 1.6% annual yield at Garmin's current stock price.
Business is booming across all of Garmin's segments. The fitness division took the lead with a 31% YoY revenue increase, but sales were also up in the outdoor, aviation, marine, and automotive segments. The five-year trend reveals that Garmin's fitness segment – which includes GPS-enabled devices for running, cycling, golf, diving, and more – is quickly gaining ground on outdoor recreational products to become the company's largest sales category.
Management is expecting another 8% overall sales growth in 2025, with earnings rising by a healthy 5.5%. And Garmin's cash flow is mighty impressive – fourth-quarter free cash flow easily covered the $144 million paid out in dividends.
That's a recipe for long-term success, and it's no wonder investors are championing Garmin's shares. And Garmin's latest results were certainly enough to push shares to new heights this week.
Aviation and Beyond
Garmin's aviation segment posted a modest 9% revenue growth in Q4 2024, thanks to innovations like the G3000 PRIME flight deck. However, rising R&D costs dampened income in this segment, but ongoing investments remain essential for innovation within aviation technologies.
In the marine segment, revenue grew by 5% in Q4 2024, with chartplotters maintaining the segment's consistency. Gross and operating margins stood at 58% and 20%, respectively, resulting in $51 million of operating income.
The fitness segment exploded with a 31% revenue surge in Q4 2024, thanks to the release of the Lily 2 Active smartwatch. No specific financial metrics are available for the fitness segment, but its significant revenue growth firmly places it among Garmin's top performers.
The outdoor segment celebrated a 29% increase in Q4 2024, driven by successful product launches such as the Approach R50 golf watch. The outdoor segment boasted a 67% gross margin and a 40% operating margin, resulting in $251 million of operating income.
Finally, the automotive OEM sector saw a 30% YoY increase in Q4 2024, despite ongoing strategic investments affecting margins. No specific financial metrics are available for the automotive segment, but its strong performance contributes to Garmin's overall revenue growth.
Overall, Garmin reported consolidated Q4 2024 revenue of $1.82 billion, a 23% YoY increase. The company's gross margin expanded to 59.3%, while the operating margin expanded to 28.3%. Operating income reached $516 million, a 52% YoY increase.
Looking ahead, Garmin is projecting fiscal year 2025 revenue at around $6.8 billion, along with a pro forma EPS of $7.80, indicating a promising future. The company intends to continue focusing on premium and niche markets, embracing innovation and advanced technological solutions in all segments. Investors should keep a close eye on Garmin's strategic investments in the aviation and automotive sectors, which could contribute to long-term profitability.
- With its impressive earnings report in 2024, Garmin's shares saw a significant increase, making it a lucrative investment opportunity in the finance market.
- As Garmin continues to innovate in the aviation and marine industries, investors are looking forward to the company's projected 8% sales growth and 5.5% earnings rise in 2025.
- To boost its shareholder returns, Garmin increased its quarterly dividend by 20% in 2024, making its stock more marketable for investors looking for a steady income source.
- The release of the Lily 2 Active smartwatch in 2024 helped the fitness segment of Garmin achieve a 31% revenue surge, making it one of the company's top performers and playing a significant role in its overall success.
