Garmin Ltd. (NYSE:GRMN) does a lot of things. GPS navigation, adventure watches, sonar for boats, avionics for planes. On Wednesday, the company reported mixed third-quarter 2026 results and then raised its full-year forecast anyway. The stock climbed 1.86% to $294.72 by the time of publication.

Here's the setup: revenue rose 12% year over year to $1.986 billion. That narrowly missed the analyst consensus of $1.989 billion, according to market data. A miss of $3 million on a $2 billion quarter is basically a rounding error, but it's still a miss. Adjusted earnings, though, came in at $2.76 per share. Analysts were looking for $2.40. That's a beat of 36 cents, which is not a rounding error.

Where the Money Came From

Fitness revenue climbed 16% to $694.33 million, driven by strong demand for advanced wearables. Outdoor jumped 20% to $597.30 million, led by adventure watches. Aviation increased 5% to $252.66 million on demand for original equipment manufacturer products. Marine rose 16% to $309.88 million, with sonar products leading broad-based growth.

Then there's Auto OEM. Revenue declined 20% to $131.91 million, primarily due to lower revenue from domain controllers. So the car business is the weak spot. Everything else is humming.

Margins and Cash

Gross margin expanded to 63.3% from 59.1% a year earlier. Operating margin improved to 30.8% from 25.8%. Those are the kind of numbers that make a CFO smile. Garmin generated $394 million in operating cash flow and $293 million in free cash flow during the quarter.

The company paid $202 million in dividends and repurchased $41 million in shares. As of Sept. 26, roughly $407 million remained under its $500 million share repurchase program, authorized through December 2028. Garmin ended the quarter with $4.1 billion in cash and marketable securities.

CEO Cliff Pemble said the company delivered another quarter of record operating performance, supported by strength across markets and product categories. Recently launched products contributed to growth, and strong execution helped Garmin achieve a record consolidated gross margin and higher operating profitability.

The Holiday Bet

Garmin raised its full-year 2026 revenue forecast to $8.15 billion from $8.05 billion. That topped analysts' expectations of $8.093 billion. It also increased its adjusted earnings forecast to $10.80 per share from $10, above the consensus estimate of $10.13.

The company cited strong year-to-date performance and continued momentum heading into the holiday shopping season. In other words, Garmin is betting that people will buy adventure watches and fitness trackers as gifts. Given the segment numbers, that seems like a reasonable bet.

So the quarter had a tiny revenue miss, a solid earnings beat, record margins, and a raised outlook. The market focused on the latter three. GRMN shares were up 1.86% at $294.72 at the time of publication on Wednesday.