Garmin Ltd. (NASDAQ:GRMN)’s core business has come under pressure due to the rise of smartphones and integrated GPS systems. However, the company has embarked on a diversification drive, geared towards targeting high growth markets to offset declines in the core business.
Diversification Drive
Garmin has shifted its focus to wearable gadgets such as outdoor watches and marine cameras to counter sales declines in its traditional automobile navigation devices. The company is also eyeing deals with automakers for the supply of inbuilt navigation and entertainment systems, as it looks to avert further declines in the auto unit.
The company reported $743 million in revenue in the recent quarter, representing a 3% year-over-year growth. Its outdoor segment made up of high-end Fenix smartwatches and hiking GPS grew 31% to generate total revenues of $184.9 million. Higher margins from devices that track heart rates calories helped the company beat estimates in the quarter.
"We experienced strong demand for the Fenix 5 watch series and expect this trend to continue throughout the holiday quarter,” said Garmin CEO Cliff Pemble said Garmin expects steady growth heading into the end of the year, with revenue expected to rise 1.7% to $3.07 billion. The company expects Pro-forma earnings per share of $2.90 a share up from an initial guidance of $2.80 a share.
Steady growth and positive outlook has helped strengthen investor sentiments on Garmin. The stock is currently trading in an uptrend. For the full year, the stock is up by more than 20%.
Garmin solid performance for the year does not come as a surprise given that it has posted eight consecutive quarter or earnings beat. It has also raised its full-year forecasts amid higher demands for its outdoor and aviation devices.
Institutional Holding
Regulatory filings indicate that Burrell Jonathan trimmed his stake in Garmin to 26.8 million shares from 27.18 million shares, held as of made September. The holdings currently represent a stake of 14.3% of the company’s, registered shares. Kao Min H is another hedge fund that owns 33.35 million shares of the company worth $1.70 billion. Hedge fund Blackrock owns 11.29 million shares valued at $576.32 million.
