Why Garmin Stock Is Sinking This Week

Core Insights - Garmin's shares fell by 15% following the release of third-quarter earnings, which showed a 12% sales growth but flat earnings per share (EPS) [1] - Despite raising its full-year EPS guidance from $8 to $8.15, the results did not meet analysts' expectations, leading to the stock decline [1][2] - The company's price-to-earnings ratio increased from 15 in 2022 to 32 prior to the earnings report, indicating high market expectations that were not met in Q3 [2] Financial Performance - Garmin reported a 12% increase in sales for the third quarter, but earnings per share remained flat [1] - The company has raised its full-year EPS guidance from $8 to $8.15, reflecting a positive outlook despite the recent earnings miss [1] - Garmin has nearly $4 billion in cash and minimal debt, with a dividend growth of 8% over the last five years, utilizing only 41% of its total net income for dividend payments [4] Business Segments and Diversification - Garmin operates in five distinct business segments: fitness, outdoor, aviation, marine, and auto OEM, providing operational diversification and growth options [3] - The company has seen its sales growth reaccelerate over the last two years, although it slightly missed revenue expectations in the latest earnings report [7] Investment Potential - With a current price-to-earnings ratio of 26, Garmin is considered an attractive option for dividend growth investors [5] - The company has generated five times the total returns of the S&P 500 since 2000, indicating strong long-term performance potential [5]