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Consumer-tech maker Garmin led the S&P 500 on Wednesday after its quarterly results solidly beat Wall Street’s expectations, sending its shares soaring as much as 10 per cent.
The Swiss-based company, which makes devices such as fitness trackers and car navigation systems, said that revenue grew 10 per cent during the three-month period ending in December to hit $861m compared to a year earlier, a solid beat over the $109.5m expected by Wall Street analysts surveyed by Bloomberg.
For the quarter, net income clocked in at $136.6m, compared to estimates of $109.6m, translating to diluted earnings per share of 72 cents versus expectations of 57 cents.
Garmin said it benefitted from a collective 25 per cent gain in four of its five key divisions – outdoor, fitness, marine and aviation products – compared to a year earlier, with those divisions contributing to 74 per cent of its overall quarterly revenue.
That helped to offset a 17 per cent decline in revenue from its auto segment during the quarter, which the company attributed to an overall decrease in the market for personal navigation devices. Even as the auto division slumps, Garmin on Wednesday unveiled that it had been selected by carmaker BMW to supply infotainment hardware for some of its vehicles.
But a potential boost from the BMW deal may not be enough to boost Garmin’s performance considerably in the coming fiscal year as Garmin said it expects revenue to be flat at $3.02bn in fiscal 2017. The company said that it expected the current growth in the outdoor, fitness, marine and aviation divisions to be offset by “ongoing declines” for personal navigation devices. It also guided for pro forma earnings per share of about $2.65.
Garmin chief executive Cliff Pemble described 2016 as a “remarkable year of growth.”
“Entering 2017, we see additional growth opportunities ahead, and we are well-positioned to seize those opportunities with a strong lineup of great products,” he added.
Garmin shares have risen 34 per cent over the past 12 months as it pushes further into the US wearables market, where it competes with companies like FitBit and Apple. After rising 10 per cent in the wake of its earnings announcement, Garmin pared those gains slightly to trade up about 8.5 per cent at pixel time, still strong enough to make it the S&P 500′s biggest gainer thus far on the day.