Garmin preview puts focus on Wednesday earnings report

Olathe-based Garmin Ltd. releases its second-quarter earnings report Wednesday after alerting investors two weeks ago that some of those numbers would disappoint.

The maker of GPS-centered fitness, automotive and other equipment had said its revenues in the quarter would be between $770 million and $775 million and that earnings would range between 70 cents a share and 72 cents a share.

Analyst Andrew Spinola at Wells Fargo Securities offered a measure of the unfavorable news. He’d been expecting earnings of 91 cents a share and revenues of about $777 million.

“We did not see this coming,” Spinola’s note to investors had said.

Garmin shares fell $3.30, or 7 percent that day. Shares finished Monday at $46.40, or $4.29 lower than before the preview on July 15.

As reporting day approaches, Spinola has told investors he remains bullish about the company’s prospects. He even expects a “relief rally” when the final numbers come out early Wednesday.

The second-quarter preview surprise amounts to a “one-quarter blip” and Garmin remains “a leading innovator,” his latest note said.

Investors will pay particular attention to Garmin’s results in its fitness division. The preview had singled out fitness for weak sales growth compared with a year earlier. Fitness sales grew only about 5 percent, Garmin had said, which was far short of Spinola’s target of more than 16 percent.

Spinola’s latest note said the “most important” thing Garmin did with its preview was to stand by its full-year sales growth outlook of 25 percent for the fitness division. In short, management expects sales in the second half of the year to make up for the weak second quarter results about to be reported.

Investors also should expect Garmin to repeat its preview comments that the rising value of the U.S. dollar has hurt its sales in foreign markets. A higher dollar makes U.S. exports more expensive for consumers who pay in their weaker home currencies.

This story was originally published July 28, 2015 at 1:30 AM with the headline "Garmin preview puts focus on Wednesday earnings report."