Garmin(NYSE: GRMN) may not be a household name for some investors, but perhaps that should change. Plenty of outdoor enthusiasts know the company's products well, including boaters, runners, hunters, golfers, and pilots.
Those hobbies and activities help explain the growing popularity of Garmin's GPS-enabled wearables and other devices. Garmin's leading technologies and use of artificial intelligence (AI) for adaptive training plans and workouts also make it a leader among its competition.
However, there is one trend that may be the biggest tailwind that's helped push Garmin stock up by about 70% in the last year.
Racing into growing profits
Garmin has a diverse product portfolio and reports business results in five segments: Fitness, outdoor, aviation, marine, and auto OEM (original equipment manufacturer). Fitness and outdoor products are the leading revenue drivers, and fitness has recently been dominating growth. Sales soared 21% in 2023, compared to 8% for all segments combined. Fitness sales continued to outpace the other segments in the first half of 2024, increasing 33% versus 17% overall.
Garmin's wearables have tapped a niche market as running has grown in popularity. That's because the top uses for running watches are exactly what Garmin's basic models offer.
Garmin's expertise taps into what runners want in activity wearables. Image source: Statista.
The more technical features such as virtual coaches and training programs are also areas where Garmin excels. Runners want more than just highly accurate and reliable global positioning systems. Garmin's advanced health metrics like heart rate variability (HRV), VO2 max, and sleep, training, and recovery data combine with long battery life to make the Garmin brand more popular than ever.
General running trends are also contributing to Garmin's growing sales. Trail running, in-person and virtual race events, and experiential and destination races have all grown in popularity. That's helped drive interest in health and fitness, and thus, demand for Garmin's smart watches and fitness trackers. Enhancing the running experience has helped boost sales and profits. Garmin investors should expect more to come.
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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.
