Garmin (GRMN) Stock Price Drops Despite Record Margin Q3 Results

Garmin came into this Q3 2026 report as a premium fitness and outdoor electronics stock with a reputation for steady execution and rich pricing. The share price still slipped 5.8% on the day to US$272.51. That reaction jars with the headline print. Revenue reached US$1.99b and pro forma earnings per share hit US$2.76, with management pointing to record gross and operating margins. For investors, the real story is margin strength. Profitability is pulling higher even as the market marked the stock down.

Love Garmin’s record margins but concerned that the market still marked the stock down on earnings day? Compare it with other companies that pair resilient profitability with balance sheet strength in our list of solid balance sheet and fundamentals stocks (24 results)

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs. Q3 2025): US$1,986.1m vs. US$1,770.9m (up 12.2%)
• Net Income (Q3 2026 vs. Q3 2025): US$541.7m vs. US$401.6m (up 34.9%)
• Basic EPS (Q3 2026 vs. Q3 2025): US$2.81 vs. US$2.09 (up 34.6%)
• Gross Margin (Q3 2026): 63.3% vs. prior year Q3 level not specified in this report (record margin level for Garmin)

Garmin hit record margins even as memory prices climbed. Ask Charlie what Garmin’s rising memory costs mean for margins.

Garmin’s Multi Engine Profit Story Under the Microscope

The upbeat Garmin pitch claims high margin categories and services will solidify earnings power.

"Bullish analysts expect Garmin to turn its high-margin fitness, aviation and marine businesses, plus expanding software and services, into sustained earnings power that supports a higher valuation multiple over time."

Q3 goes a fair way toward that goal. Fitness, Outdoor, Aviation and Marine all posted growth with strong segment profitability, and group gross margin hit a record 63.3% alongside US$612m of operating income. Record company level margins and raised full year guidance point to those premium platforms already carrying more of the earnings load.

That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for.

Garmin Margins Shine While Cost Fears Linger

Bearish research argues Garmin’s current profitability rests on shaky ground as component inflation kicks in and Outdoor hardware softens.

"Bearish analysts expect Garmin to face ongoing pressure on device sales and pricing power as higher component costs begin to affect margins, while growth in some Outdoor categories has already declined."

Q3 results cut against that concern for now. Gross margin reached a record 63.3% and operating margin guidance for 2026 sits near 29%, even with management flagging higher memory costs in Q4. Outdoor revenue rose 20% with 68% gross margin. The risk has not disappeared, but this quarter does not yet show the margin squeeze bears anticipated.

Hunt For Mispriced Earnings Power

Garmin just showed how strong reported results can still share the stage with a softer share price. The real opportunity is finding stocks that could be undervalued before the gap between business and market closes.

• Company 1 - 32% below our estimate - targets data center customers that rely on its GPUs and software stack as a default AI platform.
• Company 2 - 15% below our estimate - rides a swelling backlog from hyperscale data center builds that is transforming a low-debt contractor into a key grid and networking partner.
• Company 3 - 40% below our estimate - builds tracker, storage and control systems that developers use to squeeze more yield from each utility-scale solar project.

That is three of the list. See every one of the 29 undervalued companies on it →

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