Garmin Ltd. (GRMN) rallied 28% in July primarily on the back of a strong second-quarter earnings report. The company’s gains remained steady for most of the month, but at the end of July, the company’s shares skyrocketed following the release of their report.
The company had a lot to celebrate on the quarter. Here are the three main factors behind the stock’s rally:
1. Earnings Per Share Exceeded Estimates by $0.20
Analysts forecasted that Garmin would post an EPS of $0.67. The company reported an EPS of $0.87, greatly outpacing estimates. The EPS was also up from the same quarter last year when the company posted an EPS of $0.72.
2. Revenue Reached $812 Million
Garmin’s revenue was up 5%, which also beat analyst expectations. Analysts pegged the company’s revenue at $763 million. Garmin posted revenue of $812 million in the second quarter.
The company has been able to break into the fitness, outdoor and sleep tracking industry to stay relevant. Garmin was the leader of the GPS device market, but smartphones have caused the company to switch directions as people are using their phones as their main navigation device.
3. Fitness Growth Grew 34%
The company’s biggest revenue maker remains the automotive industry. Revenue from the industry fell 18% on the quarter, but the company’s revenue from the fitness industry grew 34%, helping the company outpace analyst forecasts.
When not counting auto sales, the company’s revenue grew by 20% on the quarter.
Profit margins rose, too. The company’s CEO, Cliff Pemble, stated that he was “pleased with the performance in the first half of 2016.”
The company’s performance in Q2 2016 has led to the company raising its full year guidance from $2.82 billion in revenue to $2.9 billion in revenue. Earnings per share have also been raised up to $2.50, a $0.25 increase from the company’s previous guidance estimates.
The company will maintain its 3.8% dividend yield.
