Garmin Profits Tripled in First Quarter 2011

Garmin GPS system Garmin, (GRMN) the industry leader in GPS navigation devices, announced last week that its profit nearly tripled in the first quarter of 2011, driven by sales growth in its core segment that makes GPS systems for cars.

The company has a lot of positive things going for it. It has a solid financial position with reasonable debt levels by most measures. Profits were boosted by an increase in sales at its automotive segment and a lower-than-expected tax rate. Garmin’s revenue increased to $507.8 million from $431.1 million a year earlier. The company earned $95.5 million, or 49 cents per share, compared with a profit of $37.3 million, or 19 cents per share, a year earlier.

Analysts at Goldman Sachs (NYSE: GS) raised their price target on shares of Garmin to $35.00 and currently have a “neutral” rating on the stock.

Garmin’s personal navigation devices used to be a must-have gadget for car owners not that long ago. But in recent times, personal GPS systems have been losing ground to smartphones offering free navigation services. Garmin does not expect the personal navigation devices (PND) segment to continue to grow year-over-year as its market has been contracting.

However, the company says it anticipates its profitability will continue improving, as the average selling price stabilizes and the market consolidates.

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