Trimble, Inc. – Value Analysis (NASDAQ:TRMB) : July 11, 2017

Capitalcube gives Trimble, Inc. a score of 66.

Our analysis is based on comparing Trimble, Inc. with the following peers – FARO Technologies, Inc., Autodesk, Inc., Garmin Ltd., L3 Technologies, Inc., Rockwell Collins, Inc., Danaher Corporation, Motorola Solutions, Inc., Microsemi Corporation, 3M Company and Caterpillar Inc. (FARO-US, ADSK-US, GRMN-US, LLL-US, COL-US, DHR-US, MSI-US, MSCC-US, MMM-US and CAT-US).

Investment Outlook

Trimble, Inc. has a fundamental score of 66 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It’s current Price/Book of 3.84 is about median in its peer group.
  • The market expects faster earnings growth from TRMB-US than from its peers and also a turnaround in its current ROE.
  • TRMB-US has relatively low profit margins and median asset efficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • TRMB-US‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • Compared with the peers chosen, TRMB-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company is likely overinvesting in a business with only median returns.
  • TRMB-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

TRMB-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 7.80% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 15.05%), and a well-cushioned interest coverage level of 8.83x, TRMB-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 10 chosen peers for the company, only 8 of the stocks have an outstanding debt balance. Companies with no debt include FARO-US and GRMN-US.

TRMB-US has maintained its Quick & Able profile from the recent year-end.

  • TRMB-US‘s interest coverage is upward trending but is still within one standard deviation below its five-year average interest coverage of 12.44x.
  • The increase in its interest coverage to 8.83x from 7.70x (in 2016) was also accompanied by an increase in its peer median during this period to 8.83x from 7.70x.
  • TRMB-US‘s debt-EV is its lowest relative to the last five years and compares to a high of 12.18% in 2015.
  • Though its debt-EV has remained relatively stable at 7.80% compared to 2016, its peer median has decreased to 15.05% from 16.97% during this period.
  • Relative to peers, debt-EV rose 1.84 percentage points.

Access the detailed analysis for Trimble, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
FARO Technologies, Inc. 0 4.27 297.58 999
Autodesk, Inc. 7.64 1.04 -15.9 -13.61
Garmin Ltd. 0 3.69 No interest exp 999
L3 Technologies, Inc. 20.8 1.74 6.1 35.01
Rockwell Collins, Inc. 15.05 1.59 12.33 45.71
Danaher Corporation 16.95 1.05 16.98 27.7
Motorola Solutions, Inc. 25.2 1.29 5.24 28.96
Microsemi Corporation 26.07 2.45 2.12 20.42
3M Company 9.47 1.99 22.13 56.58
Caterpillar Inc. 45.87 1.29 4.52 13.07
Trimble Inc. 7.8 1.47 8.83 62.21
Peer Median 15.05 1.59 8.83 35.01
Best In Class 7.64 4.27 No interest exp 999

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Company Profile

Trimble, Inc. engages in the provision of providing positioning, wireless and software technology solutions. It operates through the following segments: Engineering and Construction; Field Solutions; Mobile Solutions; and Advanced Devices. The Engineering and Construction segment serves customers working in architecture, engineering, construction, surveying, natural resources and government. The Field Solutions segment includes providing of solutions for the farming, government and consumer markets, with its products focused on agriculture and geographic information systems. The Mobile Solutions segment engages in transportation and logistics and field service management business. The Advanced Devices segment comprises of embedded technologies, timing, applanix, trimble outdoors, military and advanced systems and thingmagic businesses. The company was founded in 1978 by Charles Robert Trimble and is headquartered in Sunnyvale, CA.

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