Digital Health And Location Trends Will Power Diverse Consumer Markets

Key Takeaways

• Rapid expansion in fitness, outdoor, and international markets, plus strong smartwatch demand, is driving robust revenue and market share growth.
  
• Focus on proprietary software, premium products, and integrated devices supports rising margins and sustained high-value recurring revenue.
  
• Shifting consumer trends, intense competition, price pressures, supply chain risks, and reliance on mature products threaten Garmin’s future growth, profitability, and market position.

Catalysts

Designs, develops, manufactures, markets, and distributes a range of wireless devices worldwide.

• The accelerating adoption of digital health and fitness tracking, highlighted by double-digit growth in Garmin’s Fitness and Outdoor segments and the strong market share gains in smartwatches, should support robust recurring revenue expansion as more consumers embrace wearable technology for wellness, performance analytics, and remote health monitoring.
  
• Garmin’s global reach, particularly its strong recent growth in EMEA and APAC—where the middle class and disposable incomes are rising—positions the company to capture outsized international sales and market share gains. This global diversification is likely to drive long-term top line growth.
  
• The increasing demand for location-based and GPS-enabled applications—reflected in product advancements in aviation and marine as well as new auto OEM wins—supports persistent growth in high-margin enterprise and recreational segments. This trend underpins both revenue and net margin improvement as Garmin capitalizes on sector-wide reliance on navigation and data services.
  
• Investments in proprietary software and ecosystem features, including the premium Connect+ subscription with AI-powered insights and services like Garmin Response, are expected to deepen customer engagement and enable high-margin recurring revenue streams, steadily lifting gross and operating margins.
  
• The continual rollout of new and premium product categories, supported by Garmin’s engineering leadership, allows for higher average selling prices and positions the company to benefit from the shift toward multifunctional, integrated devices. Over time, this supports both higher revenues and an expanding profit margin profile.

Garmin Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Garmin compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Garmin's revenue will grow by 9.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 22.8% today to 23.1% in 3 years time.
• The bullish analysts expect earnings to reach $2.0 billion (and earnings per share of $10.16) by about July 2028, up from $1.5 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 34.7x on those 2028 earnings, up from 29.9x today. This future PE is greater than the current PE for the US Consumer Durables industry at 10.4x.
• Analysts expect the number of shares outstanding to grow by 0.17% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.56%, as per the Simply Wall St company report.

Garmin Future Earnings Per Share Growth

Risks

• Accelerating integration of advanced features into smartphones and all-in-one devices reduces consumer demand for dedicated Garmin wearables and navigation devices, threatening long-term revenue growth as secular trends shift away from single-purpose devices.
  
• Heightened competition from larger, more deeply integrated health and fitness ecosystems such as Apple and Samsung puts pressure on Garmin's ability to maintain both market share and pricing power, which may ultimately compress gross margins and threaten sustainable earnings.
  
• Continued commoditization of consumer electronics and industry-wide declines in average selling prices challenge Garmin's ability to preserve profitability, as price competition intensifies and new features become quickly imitated, impacting both revenue and net margins.
  
• Ongoing global supply chain risks and rising tariffs, especially those related to products manufactured outside the U.S. (notably the assumed 10% baseline and 145% specific tariffs), will likely increase operational costs and could lead to product delays, putting pressure on both gross margins and net income.
  
• Overexposure to mature product categories such as traditional GPS navigation and fitness trackers limits Garmin’s ability to benefit from high-growth or emerging segments, creating a risk of revenue stagnation or decline if secular demand does not shift materially toward newer offerings.

Valuation

• The assumed bullish price target for Garmin is $285.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Garmin's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $285.0, and the most bearish reporting a price target of just $152.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $8.5 billion, earnings will come to $2.0 billion, and it would be trading on a PE ratio of 34.7x, assuming you use a discount rate of 7.6%.
• Given the current share price of $227.71, the bullish analyst price target of $285.0 is 20.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.