GPS-based gadget maker Garmin (GRMN) reported higher-than-expected quarterly revenue, helped by strong demand for navigational devices used in aircraft and fitness trackers.
Shares of Garmin, which also forecast full-year revenue above estimates, were up 8.6% at $38.26 in early trading on Wednesday.
Revenue from the company’s fitness business, which accounts for nearly 30% of total revenue, rose 13.6% in the fourth quarter ended Dec. 26.
Garmin benefited from strong demand for its fitness products that include its Vivo family of wrist bands and smartwatches especially during the holiday season.
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However, the business faces stiff competition from smartwatches and fitness devices from companies such as Fitbit (FIT) and Garmin has been spending heavily on research and marketing.
“We believe these investments have paid off in improved top-line trends across the company’s Forerunner, Vivoactive, and Vivofit product lines,” Raymond James analyst Tavis McCourt said in a preview note on Tuesday.
Revenue in the company’s aviation business, which makes gadgets such as altimeters and transponders, rose 11.6% in the quarter.
“Early reports from boating and business jet manufacturers have been encouraging,” McCourt added.
Automotive revenue, however, fell 21% to $268.5 million as its biggest business was hit by a fall in demand for its personal navigation devices such as Nüvi and Zumo.
The company’s net income fell to $132.4 million, or 70 cents per share, from $210.2 million, or $1.09 per share.
It reported pro forma earnings of 74 cents per share, handily beating the average analyst estimate of 48 cents, according to Thomson Reuters I/B/E/S.
Net sales fell 2.7% to $781.4 million, still above the average analyst estimate of $760.1 million.
The company forecast 2016 revenue of $2.82 billion. Analysts on average were expecting $2.78 billion.
Up to Tuesday’s close, Garmin’s stock had fallen 37 percent in the past 12 months. (Reporting by Abhirup Roy and Kshitiz Goliya in Bengaluru; Editing by Don Sebastian and Shounak Dasgupta)
