Investor Worries About Garmin Might Be Overblown

The company's portable GPS navigator, nuvi 660, is currently No. 2 on Amazon.com's(AMZN Quote) electronics bestseller list, ahead of digital cameras and Apple's(AAPL Quote) iPod.

Despite the growing competition and SiRF's announcement, Garmin could do better than its peers, says Scott Sutherland, an analyst with Wedbush Morgan.

Increasing competition has squeezed smaller device manufacturers and allowed Garmin to gain market share, Sutherland says in a research note.

"Garmin manufacturers its own PND devices, so it should have a better grip on inventory levels and should not have inventory building," he says.

Instead, Sutherland blames SiRF for a first-quarter guidance that was not conservative enough to start with and subsequently forced it to cut its outlook to adjust to market realities.

SiRF's original first-quarter guidance only expected a 23% to 29% decline in revenue in the first quarter from the fourth quarter whereas its new guidance expects a 38% to 40% decline over the same period.

Sutherland says his projections call for a decrease of 51% in the number of devices sold by Garmin in the first quarter compared to the fourth-quarter holiday season and a 40% revenue decline. He says those numbers are conservative enough to fall in line with Street expectations.

It also means the current weakness in Garmin based on SiRF's warning may not be as high as perceived. For the first quarter, analysts expect Garmin to report EPS of 77 cents on revenue of $733.3 million, compared with EPS of 64 cents on revenue of $492.1 million in the year-ago quarter.

For the full fiscal year, Garmin is expected to earn $4.51 on revenue of $4.47 billion, higher than EPS of $3.89 on revenue of $3.18 billion a year ago, according to Thomson First Call.

Know What You Own: GRMN operates in the technical instrument industry within the technology sector, and some of the other stocks in its field include Thermo Fisher Scientific(TMO Quote), Agilent Technologies(A Quote), SunPower Corporation(SPWR Quote) and Applera Corp-Applied Biosystems Group(ABI Quote). These stocks were recently trading at ($56.78, +1.88%), ($30.20, -0.49%), ($72.05, +5.58%) and ($33.46, +2.70%) respectively. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.