The GPS Giant That Checks Every Buffett Box: Garmin Scores a Perfect 9/9

What Is Garmin?

Garmin is a global technology company that designs, manufactures, and markets GPS-enabled devices and wearable technology across five business segments: fitness, outdoor, aviation, marine, and auto OEM. Founded in 1989 by Gary Burrell and Min Kao, the company began as a maker of GPS navigation devices and has since evolved into a diversified hardware and software platform spanning consumer wellness, professional aviation, and marine electronics.

The company generates nearly $7 billion in annual revenue, with fitness and outdoor products driving the largest share of consumer sales. Its aviation segment supplies cockpit systems and avionics to both commercial and military customers, while the marine division provides chartplotters, fishfinders, and radar systems. Unlike many tech companies that outsource manufacturing, Garmin operates its own factories — giving it tighter control over quality and supply chain.

Garmin's competitive moat stems from vertical integration, deep domain expertise across multiple end markets, and a sticky ecosystem of devices, apps, and subscription services. The Garmin Connect platform boasts tens of millions of active users, creating a feedback loop where user data improves products and increases switching costs. In fitness wearables, Garmin competes against Apple and Fitbit but has carved out a loyal niche among serious athletes and outdoor enthusiasts who prioritize battery life, durability, and sport-specific features over general-purpose smartwatch capabilities.

How Garmin Scores on All 9 Buffettology Criteria

Garmin earns a perfect 9/9 on the Buffettology scoring system — one of the rarer scores in our database. Here's how it performs on each criterion.

1. High Return on Equity — PASS (19.3%)

Buffettology requires ROE above 12%. Garmin's 19.3% ROE shows the company generates strong profits relative to shareholder equity. This is particularly impressive because Garmin carries minimal debt — meaning the ROE isn't artificially inflated by leverage, as it can be with heavily indebted companies. This is genuine operational efficiency.

2. High Return on Invested Capital — PASS (16.8%)

ROIC measures how efficiently a company uses all capital — both debt and equity — to generate returns. The threshold is 9%. Garmin's 16.8% ROIC confirms the business deploys capital effectively across its five operating segments. Every dollar invested in product development, manufacturing, and distribution is earning well above its cost of capital.

3. Cash Machine — PASS (12.9% FCF/Assets)

This criterion checks whether the company generates strong free cash flow relative to its asset base. At 12.9%, Garmin consistently converts its operations into cash. While lower than pure software companies, this is impressive for a company that manufactures physical products and maintains its own production facilities.

4. Fair Valuation — PASS (3.8% Earnings Yield)

The earnings yield (inverse of P/E) must exceed 3.5%. Garmin's 3.8% earnings yield just clears this bar, meaning the business earns slightly more per dollar of market cap than a risk-free Treasury bond — before accounting for growth. This is the tightest pass among the nine criteria.

5. Share Buybacks — PASS (0.4% Net Reduction)

Buffett favors companies that return capital to shareholders rather than diluting them. Garmin's share count is declining at a modest 0.4% annually. While not as aggressive as some tech companies, the company also returns significant capital through its $3.60 annual dividend (1.68% yield), demonstrating shareholder-friendly capital allocation.

6. Defensible Moat — PASS (58.7% Gross Margin)

Gross margins above 40% indicate pricing power and a competitive moat. Garmin's 58.7% gross margin — for a company that manufactures hardware — is exceptional. It reflects strong brand loyalty, premium product positioning, and an ecosystem that commands pricing power across fitness, aviation, and marine markets.

7. Simple Business — PASS

This qualitative criterion evaluates whether the business is understandable and non-speculative. Garmin makes GPS devices, fitness wearables, aviation instruments, and marine electronics. The products are tangible, the revenue model is straightforward (sell devices, grow the ecosystem), and the company has operated profitably in this space for over three decades.

8. Conservative Debt — PASS (0.02x Debt/Equity)

The threshold is 1.5x. Garmin's debt-to-equity ratio of 0.02x is essentially zero — the company is virtually debt-free. This is one of the cleanest balance sheets in the technology sector and provides enormous financial flexibility during downturns or for opportunistic acquisitions.

9. Consistent Growth — PASS (46.5% Five-Year Growth)

Five-year net income growth must be positive. Garmin has grown earnings by 46.5% over the last five years, driven by expansion in fitness wearables, strong aviation demand, and disciplined cost management. Revenue for the trailing twelve months reached $6.94 billion, up 16.6% year over year.

The Bull Case

Garmin's fundamentals tell a compelling story. Here's what makes bulls confident:

Aviation is a long-duration growth engine. Garmin's G5000H flight deck was selected to modernize 24 UH-60L Black Hawk helicopters for the Brazilian Air Force — marking the fifth military program to adopt Garmin avionics. Defense and commercial aviation are long-cycle businesses with high switching costs, and Garmin is cementing its position as a critical avionics supplier. The company recently acquired additional hangar and office space to support this growing segment.

Fitness and outdoor ecosystems are sticky. Tens of millions of users on Garmin Connect create a powerful network effect. Serious runners, cyclists, and hikers don't just buy a Garmin watch — they build years of training data, route history, and health metrics on the platform. This drives repeat purchases and reduces competitive vulnerability to Apple Watch or Samsung.

Revenue growth is accelerating, not slowing. Trailing twelve-month revenue hit $6.94 billion, up 16.6% year over year. For a company of Garmin's maturity, mid-teens growth is notable and suggests the product refresh cycle and new market entries (satellite communicators like inReach Mini 3 Plus, auto OEM partnerships) are working.

The Qualcomm auto partnership opens a new frontier. Garmin and Qualcomm announced a collaboration on the Nexus automotive-grade compute platform. If Garmin can capture a meaningful share of next-generation in-vehicle infotainment and navigation systems, the auto OEM segment could inflect from a headwind to a tailwind.

The balance sheet is a fortress. With essentially zero debt and consistent free cash flow generation, Garmin has the financial flexibility to invest through cycles, make acquisitions, and maintain its dividend without financial stress.

The Bear Case

A perfect Buffettology score doesn't mean a stock is without risks. Here are the legitimate concerns:

Outdoor revenue is declining. The outdoor segment saw revenue decrease 5% year over year to $496.60 million, suggesting that the pandemic-era surge in outdoor recreation spending may be normalizing. If this trend continues, it could weigh on overall growth.

Auto OEM is aging out. A 2% decline in auto OEM net sales, driven by legacy automotive programs reaching end-of-life, raises questions about whether the Qualcomm partnership can offset declining revenue from older contracts quickly enough.

Returns on capital are slipping. Economic Profit and Return on Capital fell by 5.56% and from 22.97% to 20.69% respectively over the last twelve months. While still healthy, the direction is concerning and could signal that Garmin's best days of capital efficiency are behind it.

Analyst sentiment is mixed. The consensus rating is Hold, with an even split between Buy, Hold, and Sell recommendations. This is unusual for a company scoring 9/9 on quality metrics and suggests Wall Street sees valuation or growth concerns that the fundamentals alone don't capture.

Hardware businesses face margin pressure. Unlike pure software companies, Garmin manufactures physical products and is exposed to component costs, supply chain disruptions, and tariff risks. A 58.7% gross margin is excellent for hardware but leaves less room for error than an 89% software margin.

Valuation Overview

Garmin trades at $214.74 per share with a market cap of $41.3 billion. Here's how the valuation stacks up:

• Trailing P/E: 26.5x — above its 3-year average of 23.2x and 5-year average of 22.6x
• Forward P/E: 25.4x — modest compression expected based on EPS estimates of $8.35 (2025) and $8.88 (2026)
• Earnings Yield: 3.8% — just above the Buffettology threshold of 3.5%
• Dividend Yield: 1.68% ($3.60/share annually)
• 52-Week Range: $169.26 - $261.69 (currently trading near the midpoint)

Morningstar's fair value estimate sits at $218.00, suggesting the stock is roughly fairly valued at current levels. Simply Wall St flags Garmin as expensive relative to its estimated fair P/E of 20.7x. The stock trades at a significant premium to consumer electronics peers (industry average ~11.8x), though this premium reflects Garmin's superior margins, growth profile, and balance sheet.

The median analyst price target is $236.00, implying roughly 10% upside. Earnings growth, while positive, has decelerated to around 3.5% year over year — a pace that may not fully justify the premium valuation if it doesn't re-accelerate.

The Buffettology Verdict

Garmin is a rare perfect scorer on the Buffettology framework — and the score is well-earned. A near-zero debt balance sheet, consistent earnings growth, strong returns on capital, and a 58.7% gross margin on hardware products all point to a business with genuine competitive advantages and disciplined management.

The tension for investors is that quality is already reflected in the price. At 26.5x trailing earnings — above historical averages — Garmin's valuation leaves limited margin of safety. The 3.8% earnings yield barely clears the Buffettology threshold, and earnings growth has decelerated. Bulls will argue that aviation, fitness ecosystem stickiness, and the Qualcomm auto partnership provide a long runway. Bears will point to declining outdoor revenue, aging auto OEM programs, and a stock trading near fair value.

What's undeniable is that Garmin is a high-quality business by nearly every fundamental measure. Whether the stock is a compelling opportunity at today's price depends on your confidence in growth re-acceleration and your required margin of safety.

Check GRMN on Buffett Score

For more data-driven stock discovery, download Vetted to find quality companies that meet rigorous fundamental criteria.