Garmin stock struggling at $130 resistance after better than expected Q4 results

Garmin (NASDAQ: GRMN) shares have advanced more than 10% since the beginning of January, and the current share price stands around $129. The company reported Q4 results this Wednesday; total revenue has increased by 22.7%, and the Board of directors announced a dividend increase.

Fundamental analysis: Garmin reported better than expected Q4 results

Garmin is an American multinational technology company specializing in GPS technology, and the company also produces activity trackers and smartwatches. The COVID-19 pandemic has positively impacted Garmin products’ sales, and shares of this company remain in the buy zone.

Garmin reported Q4 results this Wednesday; total revenue has increased by 22.7% Y/Y to $1.35B while Q4 GAAP EPS was $1.73 (beats by $0.34). Total revenue has increased above the expectations (+$160M), and the Q4 gross margin was 58.5%.

Garmin reported that net sales of outdoor, fitness, marine, and auto products in Q4 had increased by 40%, 26%, 48%, and 11%. The company generated approximately $387 million of free cash flow in Q4 and ended the quarter with cash and marketable securities of around $3 billion.

Garmin declared a $0.61/share quarterly dividend in line with previous, but the Board of directors announced a dividend increase of +9.8% for the upcoming period. Over the last two years, Garmin has beaten EPS estimates every time, and the company expects to achieve healthy revenue and earnings growth in 2021.

“In a year filled with unimaginable challenges, Garmin delivered record revenue and profits. Strong demand for active lifestyle products fueled our growth, and we expect these trends to continue into 2021. I am very proud of what we have accomplished in 2020 and look forward to the opportunities and challenges of the new year,” said Cliff Pemble, President, and CEO of Garmin.

Analysts stay “bullish” on Garmin, but with a $25.34B market capitalization, shares of this company are a little expensive.

Technical analysis: Garmin shares are trading near record levels

Garmin stock is trading near record levels, and the first sign of the trend reversal could be if the price falls below the $100 support level. Technically looking, Garmin shares could advance even more, but the risk/reward ratio is not good enough for “value” investors.

The current support levels are $120 and $110, $ 130, $135, and $140 represent the resistance levels. If the price jumps above $135 resistance, it would be a signal to trade stock, and the next target could be around $140.

On the other side, if the price falls below $120, it would be a firm “sell” signal, and the next target could be around $110.

Summary

Garmin reported Q4 results this Wednesday; total revenue has increased by 22.7%, and the Board of directors announced a dividend increase. Technically looking, Garmin shares could advance even more, but the risk/reward ratio is not good enough for “value” investors.