Garmin Stock Price Plunges Despite Positive Q4 Earnings Report

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.

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.

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.

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.