Why Did Garmin Stock Surge This Week?
Key Points
Garmin's fitness segment is on fire.
The stock is up over 45% this year.
Garmin has a fortress balance sheet, and investors need to take that into account.
- 10 stocks we like better than Garmin ›
Garmin (NYSE: GRMN) reported record second-quarter results this week, and the stock took off. As of midday Friday, shares were up 22.4% for the week, according to data provided by S&P Global Market Intelligence.
Investors already expected a strong year, with the company guiding for 9% year-over-year revenue growth in 2026. Management boosted that guidance after Q2 results. That helps explain why the stock popped, but Garmin shares are still cheaper than they look.
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Don't overlook the cash hoard
Garmin operates five segments, selling devices that use GPS technology and artificial intelligence (AI) to track and monitor health and fitness, provide training plans, and offer navigation and solutions tailored specifically for marine and aviation activities.
Its fitness segment has become the largest after averaging 32% year-over-year revenue growth in every quarter since the start of 2024. That growth has helped drive the stock higher and was one reason Garmin boosted its full-year 2026 revenue and earnings guidance. Management now sees 11% year-over-year revenue growth this year, and almost 17% earnings per share (EPS) growth, partly thanks to improving margins.
Now investors need to decide if this week's jump means it's too late to buy Garmin stock. It is now trading at a P/E of almost 30 based on this year's EPS guidance. But there's a catch. Garmin has $4.4 billion in cash and marketable securities with no debt on its balance sheet. That's about 8% of its market cap and should be taken into consideration when determining its valuation.
That cash will eventually make its way to shareholders through a combination of growth investments, dividends, and share buybacks. With new products being rolled out, including the recent launch of the screenless Cirqa smart band, growth should continue. That makes the recent stock price still a good buy for investors looking beyond 2026.
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Howard Smith has positions in Garmin. The Motley Fool has positions in and recommends Garmin. The Motley Fool has a disclosure policy.
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