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Wall Street has always welcomed second chances. Once known for its in-car GPS devices, Garmin Ltd (GRMN - Free Report) has emerged as one of the most exciting “second chances” of the year, and investors are finally starting to reward the company for its shift to wearable technology.

Founded in 1989, Garmin became a household name thanks to its affordable and reliable GPS technology, which was quickly integrated into consumer navigation devices in the early 2000s. On top of that, Garmin has always been a market leader in GPS technology for the aviation, marine, and outdoor industries.

But Garmin's management has also been proactive and forward-thinking. The company's traditional GPS units are less popular in today's smartphone-dominated world, but Garmin has successfully shifted to a wearable tech focus. Now, after another great quarter, GRMN is a Zacks Rank #1 (Strong Buy) and looking like one of the strongest stocks in the consumer gadgets space.

Latest Earnings Report

Earlier this month, Garmin reported third-quarter results of 75 cents per share, beating the Zacks Consensus Estimate of 66 cents. The company notched revenues of $743.1 million, outpacing our consensus estimate by $25 million and expanding 2.9% year-over-year.

Product line expansion and innovation remained a key component of Garmin's performance. In the quarter, the company launched the Descent dive watch, the Impact bat swing sensor, and the TXi series of touchscreen flight displays. Garmin also unveiled several new wearables and partnered with Amazon (AMZN - Free Report) to launch Garmin Speak, a device that brings full range of Alexa skills inside car.

Gross margin for the quarter was 58.4%, up 215 basis points from the year-ago period. Solid demand drove volume in all segments except Auto, helping to lift segment gross margins on a year-over-year basis.

Estimate Revisions and Key Stats

As a result of Garmin's solid quarter, positive earnings estimate revisions for the company's upcoming fiscal periods have been on the rise. The Zacks Consensus Estimate for Garmin's full-year earnings has now improved by 11 cents over the past 30 days, and the Zacks Consensus Estimate for its fiscal 2018 has gained 12 cents in that same timeframe.

On top of this, Garmin is generating $3.15 in cash per share right now, outpacing its “Electronics - Miscellaneous Products” industry average of $0.88. Furthermore, the company's P/E ratio of 20.95 and net margin of 22.65% also best their respective industry averages, implying that GRMN is one of the strongest picks in this space right now.

Looking ahead, Garmin will look to leverage its position as an industry leader and proven innovator to continue delivering quality products. This should lead to further profitability, and the gadget maker is expected to improve its earnings by an annualized rate of 8.35% over the next three to five years.

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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