- Record Financial Performance: Q4 operating income reached $614M (28.9% margin), while full-year operating income hit $1.9B (25.9% margin) on $7.25B revenue (15% growth).
- Segment Growth Leaders: Fitness segment surged 33% to $2.36B (wearables & market share gains), followed by Marine (+10% to $1.18B) and Aviation (+13% to $987M).
- 2026 Outlook: Revenue projected at $7.9B (+9%), operating income to exceed $2B for first time, and EPS expected at $9.35 (+9%) with 16% tax rate.
- Dividend & Share Repurchase: Proposed $4.20/share dividend (17% increase) and $500M buyback program, supported by $1.4B free cash flow (2026 guidance).
Segment-wise Performance
The fitness segment was the key growth driver, with revenue increasing 33% to $2.36 billion, driven by wearables and market share gains. The Outdoor segment revenue increased 5% to $2.05 billion, primarily driven by adventure watches. Aviation revenue grew 13% to $987 million, with contributions from both OEM and aftermarket product categories. Marine segment revenue increased 10% to $1.18 billion, driven by growth across multiple categories led by chartplotters. Auto OEM segment revenue rose 9% to $665 million, primarily driven by growth in domain controllers.
Outlook and Guidance
Garmin expects 2026 to be another year of strong top and bottom-line growth, with revenue increasing approximately 9% to $7.9 billion and operating income exceeding $2 billion for the first time. The company anticipates the fitness segment to be the strongest contributor to 2026 consolidated growth. Garmin expects free cash flow to be approximately $1.4 billion in 2026, with capital expenditures of approximately $400 million.
Valuation and Metrics
With a P/E Ratio of 27.45 and an EV/EBITDA of 21.03, Garmin's valuation suggests that the market has already priced in significant growth expectations. The company's ROE stands at 19.72%, and ROIC at 16.71%, indicating strong profitability. The Dividend Yield is 1.45%, and Free Cash Flow Yield is 2.04%, providing a relatively attractive return for investors. Analysts estimate next year's revenue growth at 9.2%, which is in line with Garmin's guidance.
Strategic Initiatives
Garmin is shifting R&D resources to develop new business and concepts, and expects significant volumes from the Mercedes program in early 2027. The company is also investing in its Connect+ service, which has seen accelerated free trials and high conversion rates. Garmin's acquisition of a new facility in Meta will enable it to certify products on larger aircraft and potentially offer products on larger airplanes.