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Garmin's Q3 pro forma EPS rose 39% to $2.76, beating the $2.38 estimate, while net sales rose 12% to $1.99B.
Garmin's Fitness and Outdoor sales rose 16% and 20%, respectively, fueled by wearables and adventure watches.
Garmin lifted its 2026 revenue outlook to $8.15B and pro forma EPS forecast to $10.80, raising margin targets.
Garmin Ltd. (GRMN - Free Report) reported pro forma earnings of $2.76 per share for the third quarter of 2026, beating the Zacks Consensus Estimate of $2.38 by 15.97%. The bottom line increased 39% year over year from $1.99 reported in the year-ago quarter.
Net sales rose 12% to $1.99 billion and came in line with the Zacks Consensus Estimate. Fitness and Outdoor together accounted for 65% of sales, supported by demand for wearables and adventure watches. Gross margin expanded 420 basis points to 63.3%.
GRMN's Fitness Revenues Rise on Wearable Demand
Fitness revenues advanced 16% year over year to $694.3 million. The segment benefited from continued demand for wearables, with operating income increasing 19% to $230.6 million. Gross and operating margins were 63% and 33%, respectively.
During the quarter, Garmin launched the CIRQA Smart Band, a screenless wearable offering health and fitness insights. The company also recently introduced new Edge cycling computers, including the Edge 1060 with hands-free voice controls and the Edge Explore 3 series.
Outdoor revenues jumped 20% to $597.3 million, primarily driven by demand for adventure watches. Operating income climbed 37% to $233 million, while gross and operating margins reached 68% and 39%, respectively.
The company launched the f??nix 9 and f??nix 9 Pro adventure watch series during the quarter. It also introduced Garmin Drive GPS navigators featuring high-resolution ultrawide displays. The launches expanded Garmin's flagship adventure watch and navigation offerings.
GRMN Sees Growth Across Aviation and Marine
Aviation revenues increased 5% to $252.7 million, led by original equipment manufacturer product categories. Operating income rose 8% to $65.8 million. The segment recorded gross and operating margins of 78% and 26%, respectively.
Garmin unveiled the G2000 PRIME flight deck for high-performance piston and electric aircraft and announced certification of an all-glass retrofit cockpit for the original Cessna CitationJet.
Marine revenues grew 16% to $309.9 million, driven by broad-based demand led by sonar products. Marine operating income surged 90% to $94 million, while gross and operating margins were 64% and 30%, respectively. The company launched LiveScope 2 and received six Product of Excellence awards from the National Marine Electronics Association.
Garmin's Auto OEM Revenues Contract
Auto OEM revenues declined 20% year over year to $131.9 million, primarily due to domain controllers. The segment recorded a gross margin of 16% and an operating loss of $11.9 million compared with a loss of $16.7 million a year earlier.
Lower operating expenses helped narrow the operating loss despite the decline in sales. Garmin continues to work toward the launch of its Mercedes-Benz domain controller program.
Garmin's Operating Profitability Improves
Gross profit increased 20% year over year to $1.26 billion, while gross margin expanded 420 basis points to 63.3%. Operating income rose 34% to $611.6 million, with operating margin expanding 500 basis points to 30.8%. Favorable segment mix, lower product costs and approximately $33 million in refunds of previously paid tariffs supported profitability. GAAP earnings jumped 35% to $2.80 per share.
Operating expenses increased 10% to $646.1 million. Research and development expenses rose 9% to $312.9 million, mainly due to personnel costs. Selling, general and administrative expenses climbed 10% to $333.2 million, reflecting higher personnel-related and advertising expenses.
Garmin Returns Cash to Shareholders
Garmin generated $393.9 million in operating cash flow and $293.3 million in free cash flow during the quarter compared with $485.6 million and $425.1 million, respectively, a year earlier. Capital expenditures totaled $100.6 million. In the first three quarters of 2026, it generated operating and free cash flows of $1.33 billion and $1.04 billion, respectively. It incurred capital expenditure of $295 million during the first nine months of 2026.
The company paid $202 million in dividends and repurchased $41 million of shares. In the first three quarters of 2026, Garmin paid $578.5 million in dividends and bought shares worth $123.2 million. Approximately $407 million remained under its share repurchase authorization at the end of the third quarter. It ended the quarter with approximately $4.1 billion in cash and marketable securities and $2.25 billion in inventory.
Garmin Raises 2026 Outlook
Garmin now expects 2026 revenues of approximately $8.15 billion, up from its prior projection of $8.05 billion. Pro forma earnings are forecast at $10.80 per share compared with the previous outlook of $10.
The company raised its gross margin forecast to 61% from 59.7% and its operating margin estimate to 29% from 27%. The projected pro forma tax rate remains unchanged at 16.5%.
Management raised its 2026 guidance following record operating results and continued momentum heading into the holiday selling season.
Shares of Analog Devices have rallied 54.4% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $13.00 per share, up by a penny over the past seven days, indicating an increase of 66.9% year over year.
Shares of Applied Materials have jumped 54.5% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.79 per share, unchanged over the past 30 days, calling for a rise of 35.8% year over year.
Cisco Systems shares have surged 45.3% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2027 earnings is pegged at $5.11 per share, unchanged over the past 30 days, implying an increase of 18% year over year.
View the Zacks #1 Rank List
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Garmin Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Key Takeaways
Garmin Ltd. (GRMN - Free Report) reported pro forma earnings of $2.76 per share for the third quarter of 2026, beating the Zacks Consensus Estimate of $2.38 by 15.97%. The bottom line increased 39% year over year from $1.99 reported in the year-ago quarter.
Net sales rose 12% to $1.99 billion and came in line with the Zacks Consensus Estimate. Fitness and Outdoor together accounted for 65% of sales, supported by demand for wearables and adventure watches. Gross margin expanded 420 basis points to 63.3%.
GRMN's Fitness Revenues Rise on Wearable Demand
Fitness revenues advanced 16% year over year to $694.3 million. The segment benefited from continued demand for wearables, with operating income increasing 19% to $230.6 million. Gross and operating margins were 63% and 33%, respectively.
During the quarter, Garmin launched the CIRQA Smart Band, a screenless wearable offering health and fitness insights. The company also recently introduced new Edge cycling computers, including the Edge 1060 with hands-free voice controls and the Edge Explore 3 series.
Garmin Ltd. Price, Consensus and EPS Surprise
Garmin Ltd. price-consensus-eps-surprise-chart | Garmin Ltd. Quote
Garmin's Outdoor Sales Surge on Adventure Watches
Outdoor revenues jumped 20% to $597.3 million, primarily driven by demand for adventure watches. Operating income climbed 37% to $233 million, while gross and operating margins reached 68% and 39%, respectively.
The company launched the f??nix 9 and f??nix 9 Pro adventure watch series during the quarter. It also introduced Garmin Drive GPS navigators featuring high-resolution ultrawide displays. The launches expanded Garmin's flagship adventure watch and navigation offerings.
GRMN Sees Growth Across Aviation and Marine
Aviation revenues increased 5% to $252.7 million, led by original equipment manufacturer product categories. Operating income rose 8% to $65.8 million. The segment recorded gross and operating margins of 78% and 26%, respectively.
Garmin unveiled the G2000 PRIME flight deck for high-performance piston and electric aircraft and announced certification of an all-glass retrofit cockpit for the original Cessna CitationJet.
Marine revenues grew 16% to $309.9 million, driven by broad-based demand led by sonar products. Marine operating income surged 90% to $94 million, while gross and operating margins were 64% and 30%, respectively. The company launched LiveScope 2 and received six Product of Excellence awards from the National Marine Electronics Association.
Garmin's Auto OEM Revenues Contract
Auto OEM revenues declined 20% year over year to $131.9 million, primarily due to domain controllers. The segment recorded a gross margin of 16% and an operating loss of $11.9 million compared with a loss of $16.7 million a year earlier.
Lower operating expenses helped narrow the operating loss despite the decline in sales. Garmin continues to work toward the launch of its Mercedes-Benz domain controller program.
Garmin's Operating Profitability Improves
Gross profit increased 20% year over year to $1.26 billion, while gross margin expanded 420 basis points to 63.3%. Operating income rose 34% to $611.6 million, with operating margin expanding 500 basis points to 30.8%. Favorable segment mix, lower product costs and approximately $33 million in refunds of previously paid tariffs supported profitability. GAAP earnings jumped 35% to $2.80 per share.
Operating expenses increased 10% to $646.1 million. Research and development expenses rose 9% to $312.9 million, mainly due to personnel costs. Selling, general and administrative expenses climbed 10% to $333.2 million, reflecting higher personnel-related and advertising expenses.
Garmin Returns Cash to Shareholders
Garmin generated $393.9 million in operating cash flow and $293.3 million in free cash flow during the quarter compared with $485.6 million and $425.1 million, respectively, a year earlier. Capital expenditures totaled $100.6 million. In the first three quarters of 2026, it generated operating and free cash flows of $1.33 billion and $1.04 billion, respectively. It incurred capital expenditure of $295 million during the first nine months of 2026.
The company paid $202 million in dividends and repurchased $41 million of shares. In the first three quarters of 2026, Garmin paid $578.5 million in dividends and bought shares worth $123.2 million. Approximately $407 million remained under its share repurchase authorization at the end of the third quarter. It ended the quarter with approximately $4.1 billion in cash and marketable securities and $2.25 billion in inventory.
Garmin Raises 2026 Outlook
Garmin now expects 2026 revenues of approximately $8.15 billion, up from its prior projection of $8.05 billion. Pro forma earnings are forecast at $10.80 per share compared with the previous outlook of $10.
The company raised its gross margin forecast to 61% from 59.7% and its operating margin estimate to 29% from 27%. The projected pro forma tax rate remains unchanged at 16.5%.
Management raised its 2026 guidance following record operating results and continued momentum heading into the holiday selling season.
GRMN’s Zacks Rank and Stocks to Consider
Garmin currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Analog Devices (ADI - Free Report) , Applied Materials (AMAT - Free Report) and Cisco Systems (CSCO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have rallied 54.4% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $13.00 per share, up by a penny over the past seven days, indicating an increase of 66.9% year over year.
Shares of Applied Materials have jumped 54.5% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.79 per share, unchanged over the past 30 days, calling for a rise of 35.8% year over year.
Cisco Systems shares have surged 45.3% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2027 earnings is pegged at $5.11 per share, unchanged over the past 30 days, implying an increase of 18% year over year.