Garmin 2016 Outlook: A Top-Down Analysis

Garmin (GRMN) is an American company that specializes in handheld, fixed-mount and wearable devices.

For over two decades, the company has designed, produced and delivered GPS guided and wireless devices to individuals across different backgrounds including health and fitness, medical, media and entertainment, fashion and lifestyle, just to name a few.  

The company offers a range of GPS enabled auto navigation and communication devices, as well as a range other products and applications designed for the now mobile GPS market.

A quick rundown of key items

As a device manufacturer, the company’s business model is anchored on five core principles.

The ability to develop industry leading products that can compete in the market is the primary principle while the ability to produce such products at low costs is another. The other one is a dedicated customer support which includes interaction with customers, business partners, and the public. The other two are integrity and respect & teamwork, which relate to internal operations.

Garmin has been one of the few technology companies that actually have a functioning customer service line in addition to other forms of support provided. Furthermore, a Garmin Support Number is also available on several other third party platforms, which offer technical support to customers. Therefore, if the direct line to Garmin is too busy, there are alternatives to getting the answers a customer seeks. But that’s not the main thing.

Garmin is a fantastic company overall, which targets a niche market. Its target market has in the last few years attracted the attention of industry giants such as Apple (AAPL), Alphabet (GOOG)(GOOGL), and Samsung Electronics (SSNLF), among others. In the past few months, the company’s stock has been choppy bowing to the competition posed by these giants alongside other struggling players in the industry such as Fitbit (FIT).

As early as Aug. 22, 2016, Garmin share price was rallying at highs of $55.94 per share. Fast forward 30 days, and the company’s stock is now trading at $47.55 having shelled off 5 points along the way. This includes a 5.5% loss in the aftermath of Goldman Sachs downgrading the stock to Sell.

At the point of writing this article, the stock is trading at $47.55. And having already seen how the stock performed in August – with a rally that saw the stock gain up to 40% - Bulls will certainly be glancing at it with a lot of optimism. Investment research company Zacks are tipping the company’s stock to perform in the coming fiscal.

Zacks are also projecting the company’s earnings to grow YoY at a rate of 5.85% for the next five years. Analysts are projecting an increase of 1.2% in this year’s earnings over last years and a further 2.08% increase for next year’s earnings over this year’s.

Upon registering strong Q2 results, the company is looking at the full year projections with a lot of excitement and optimism. EPS projections have moved from $2.25 to $2.50; Revenues have also followed suit, with a forecast of $2.9 billion.

Garmin is a big winner in the wearable devices market partly because of its extensive reach in the market. The company has subsidiaries all over the world, with its primary subsidiaries in the U.S., the U.K., and Taiwan.

The market once monopolized by Garmin is now slowly being swallowed by smartphones as well as other emerging competitors such as Fitbit and GoPro (GPRO). This prompted the company to shell off 18% in revenues from Auto category according to the results from the last quarter. 

This did not affect the company’s share price, however, mostly because growth remained strong in areas of fitness; this area saw growth in upwards of 34% which played a huge role in company’s 20% increase in revenues in Q2.


Despite Garmin stock price plummeting in the wake of Goldman Sachs downgrading the company, the future of Garmin is still very bright.  The company has an extensive market reach across the United States, a country that has high acceptance for wearable technology. 

The Asian market has also seen growth sprouts across the pacific mainly due to its strong user base. And the region is believed to take center stage for wearable technologies in the foreseeable future. Europe has also come into the fold as more and more people focus on keeping a healthy and active lifestyle.

At this point, it is safe to say that holding onto your Garmin stock could be a wise thing to do as the company’s stock price seems to be ready to take on another surge after taking a breather.

Disclosure: The material appearing on this article is based on data and information from sources I believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor ...

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