The Dividend Pirate

“The market can stay irrational longer than you can stay solvent. “

- Ben Finkelstein

The above quote best sums up the market’s irrationality presently. How else can you term the markets reaction to Garmin’s fourth quarter stock earnings? Here is how Garmin’s last quarter went,

Garmin Ltd. sold $1.21 billion worth of navigation gear during the fourth quarter, up 99 percent from a year ago. It was the first time the Olathe manufacturer’s sales topped $1 billion in a single quarter.

Navigation equipment for cars and trucks continues to be a hot ticket for the Olathe company, as sales of portable devices grew by 124 percent, to $999 million. Sales of its other products — aviation, marine and personal fitness — grew by double digits.

The company’s earnings per share of $1.39 shattered Wall Street expectations. Analysts had projected earnings of $1.12.

“The strong holiday season demand we experienced clearly demonstrated that our products are well-positioned to take advantage of the growing interest in portable navigation devices,” Min Kao, Garmin’s chief executive, said in a statement.

Garmin reported a $307.2 million profit for the three months, up from $180.3 million a year ago. Sales for the year totaled $3.18 billion — up more 79 percent from 2006.

The company said its gross and operating margins — closely watched by investors and Wall Street analysts — were better than expected. The company reported a gross margin of 46 percent for the quarter, about four percent below 2006. The company’s operating margin was 29 percent, about 2 percent below the same
quarter in 2006.

The company forecast 2008 earnings “to exceed” $4.40 a share on revenue of $4.5 billion. Analysts’ mean estimates were for earnings of $4.40 a share on revenue of $4.26 billion.

Overall a very impressive quarter as you can see from the results above. They had the best quarter ever with sales and profits. They also guided 2008 earnings to be more than what they had initially projected in this tough recessionary environment. Garmin is also going to buyback 5 million stocks which shows the company’s confidence.

Now the fun part. This is how the market reacted to the sterling results,

Even so, Garmin’s stock, up more than 5% earlier, reversed course and was lately lower by 4.6% at $66.34.

This stock never ceases to amaze me. Below are a few of my previous articles on why I think Garmin is a great buy,

• Top 3 stock to buy

• Garmin

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