Why Garmin Stock Is Racing Higher Today

GPS device maker Garmin (NYSE: GRMN) has been a real winner for investors. After another stellar earnings report today, the stock has nearly doubled in the last 12 months. The fourth-quarter results along with management's 2025 guidance have shares soaring again today.

Garmin stock was trading up by 12.6% as of 11:30 a.m. ET, near the morning's highs.

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Garmin blasts past guidance

It was a strong fourth quarter by every measure, and it closed out a year with results overachieving even the company's internal guidance. Garmin's management has a history of fairly conservative guidance, but 2024 full-year revenue of $6.3 billion -- a 20% increase versus 2023 -- dwarfed the $5.75 billion management initially predicted in early 2024. It was also impressively above the $6.12 estimate the company provided as recently as the third-quarter report.

Maybe more importantly, earnings growth has been outpacing sales. Full-year pro forma earnings per share (EPS) grew 32% year over year. Garmin presents pro forma EPS to provide a more consistent comparison. It shows earnings before the impact of foreign currency gains or losses and certain other income tax items.

Image source: Garmin.

Run, baby, run

One big reason Garmin stock is running is that many people have decided to take up running themselves. Sales from its fitness segment soared 31% in the fourth quarter. It saw growth in all fitness categories led by continued solid demand for its wearables. But that's not the only growth segment. Revenue also increased in its outdoor, aviation, marine, and automotive segments in the quarter.

The company now holds about $3.7 billion in cash and marketable securities. Its pristine balance sheet contains no debt. That helped give management confidence to propose a 20% dividend increase from now on. Shareholders will very likely vote to approve that boost.

Guidance for 2025 also contributed to today's market reaction. Garmin currently expects revenue to rise 8% in 2025, with pro forma EPS moving 5.5% higher. Knowing its conservative history, watch for that guidance to move higher as the year progresses, too.

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Howard Smith has positions in Garmin and has the following options: short April 2025 $210 calls on Garmin. The Motley Fool has positions in and recommends Garmin. The Motley Fool has a disclosure policy.