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Why Is Trimble (TRMB) Down 0.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Trimble Navigation (TRMB - Free Report) . Shares have lost about 0.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Trimble due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Trimble Q3 Earnings & Revenues Beat Estimates

Trimble reported third-quarter 2021 non-GAAP earnings of 66 cents per share, which beat the Zacks Consensus Estimate by 11.9%. The bottom line also improved 10% year over year but declined 8.3% sequentially.

The company’s revenues were $901.4 million, which surpassed the Zacks Consensus Estimate by 0.3%. Also, the figure was up 14% year over year. On a sequential basis, it decreased 4.6%.

The top line was driven by solid performance in machine control in civil construction, guidance in agriculture, and survey and mapping. Further, solid momentum across geospatial, and resources & utilities segments aided the results.

Top Line in Detail

Product revenues (accounting for 61% of revenues) totaled $551.2 million, up 19.5% on a year-over-year basis. Services revenues (18% of revenues) were $159.9 million, which decreased 0.5% year over year. Subscription revenues (21% of revenues), however, increased 11.9% from the year-ago quarter to $190.3 million.

Trimble operates under the following four organized segments.

Buildings and Infrastructure: The segment generated revenues of $349.7 million (accounting for 39% of total revenues), which increased 10.2% on a year-over-year basis.

Geospatial: This segment generated revenues of $205.4 million (23% of total revenues), which grew 24% from the prior-year quarter.

Resources and Utilities: This segment generated revenues of $184.8 million (21% of total revenues), which increased 23% from the prior-year quarter.

Transportation: The segment generated revenues of $161.5 million (accounting for 18% of total revenues), which improved 1.6% on a year-over-year basis.

Operating Details

For the third quarter, non-GAAP gross margin came in at 58.7%, contracting 10 basis points (bps) year over year.

As a percentage of revenues, adjusted EBITDA contracted 90 bps year over year to 25.9%.

On a non-GAAP basis, operating expenses accounted for 34.9% of revenues and expanded 30 bps from the year-ago quarter.

Consequently, non-GAAP operating margin came in at 23.8%, which contracted 40 bps year over year.

Balance Sheet & Cash Flow

At the end of third-quarter 2021, cash and cash equivalents were $513.2 million, up from $484.4 million at the end of second-quarter 2021.

Accounts receivables were reported at $580.5 million, which decreased from $583.2 million in the second quarter.

Total debt was $1.32 billion at third quarter-end compared with $1.38 billion at second quarter-end.

The company generated $166.4 million of cash from operations compared with $200.6 million in the second quarter.

Trimble generated free cash flow of $156.4 million for the reported quarter.

Guidance

For full-year 2021, Trimble expects revenues between $3.59 billion and $3.64 billion.

Also, the company anticipates non-GAAP earnings per share for 2021 in the range of $2.61-$2.69.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Trimble has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Trimble has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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