Categories Analysis, Earnings, Technology

Earnings preview: Garmin faces tough competition ahead

Garmin Ltd. (GRMN) is scheduled to report fourth-quarter 2018 earnings results on Wednesday, February 20, before market open. Wall Street expects the company to report earnings of $0.79 per share on revenue of $889.7 million. Garmin has consistently beat earnings estimates in the past four quarters.

Garmin has posted strong results over the past two quarters with particular strength in wearables. The smartwatch market is a rapidly growing one and Garmin, along with its peers, are expanding into this space and looking to increase their market share.

The smartwatch market is currently dominated by the likes of Apple (AAPL) and Fitbit (FIT) and Garmin faces tough competition in the area. The company will need a new strategy to gain meaningful ground here.

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The company has been making acquisitions in various sectors and these will help diversify its portfolio and boost growth. Last quarter, Garmin acquired flight planning and services provider, FltPlan.com, and on Tuesday, the company said it was acquiring Tacx, a manufacturer of indoor bike trainers.

In the third quarter, Garmin topped revenue and earnings estimates, with revenue rising 8% and EPS improving by 30%. All segments, except for auto, posted double-digit sales growth with the highest in Marine. The Fitness and Outdoor segments benefited from growth in wearables and the company remains focused on opportunities in this space.

Garmin’s stock has gained 10% in the last 52-weeks and looking at the past one month, shares have climbed over 9%.

 

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