Garmin Stock Price Plunges Despite Positive Q4 Earnings Report

Garmin Stock Price Plunges Despite Positive Q4 Earnings Report

  • Sales increased 18% to $1.1 billion with a record full-year revenue
  • Earnings per share smashed market estimates
  • “We are excited about the future because each business segment offers unique growth opportunities for 2020 and beyond,” the CEO said.

Shares of Garmin closed 1.6% lower this week despite printing a fresh 13-year high two days ago on better-than-expected fourth-quarter earnings.

Fundamental analysis: Great holiday season fuels positive earnings report

The GPS device giant reported that its sales rose 18% to $1.1 billion in the fourth-quarter. Better-than-expected sales made Garmin smash the analysts’ estimates of $0.80 per share as it reported earnings of $1.02 per share.

“2019 was another exciting year of growth thanks to our strong lineup of products and unique innovations. We entered 2020 with a great lineup of recently introduced products with more on the way. We are excited about the future because each business segment offers unique growth opportunities for 2020 and beyond,” said Cliff Pemble, President and CEO of Garmin.

A great quarter was possible thanks to a phenomenal performance from aviation, marine, and outdoor units of Garmin. Looking at the full-year, Garmin expects earnings of $3.70 per share, higher than the $3.52 expected by the market. Revenue is expected at $3.7 billion – a new record for the company and 12% higher than last year – again better than the $3.43 billion expected from analysts.

2020 will also be a year of accelerated investment to support recently awarded programs. We anticipate consolidated revenue will reach approximately $4 billion, up 6% year-over-year as growth in fitness, outdoor, and marine more than offset a slight decline in the auto segment,” added Pemble.

The company expected free cash flow to be approximately $750 million for 2020.

Following the release of earnings report, analysts upgraded earnings estimates for Garmin, but haven’t changed their view of the stock with the consensus price target for Garmin stock price sitting at $96.63.

Shares of the company closed the week at $96.58.

Technical analysis: Stock retreats despite the positive report

Garmin stock price opened nearly 7% higher on Wednesday following the release of the earnings report to ultimately print a fresh 13-year high of $105.58. However, the stock was trading maybe a bit higher for some investors who used the opportunity to increase selling pressure and force a negative weekly close at $96.58.

Garmin stock price (TradingView)

The stock price is now approaching the key short-term support at $95 in the context of the 200-DMA. If broken, the zone between $87.50 and $90 is seen as a major supporting bloke. On the other side, the bulls will try to use the positive fundamentals and facilitate more buying interest to try and print a new multi-year high.

Summary

Shares of Garmin closed the week lower despite very good earnings numbers. Still, the price action printed the highest levels seen since 2007 in the first reaction after the release of the fourth-quarter numbers.

By Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.