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Trimble's Twin Buyouts to Boost Connected Forest Solutions

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Technology solutions provider Trimble Inc.’s (TRMB - Free Report) share price appreciated 25.7% over the last one year compared with the Zacks Electronics - Miscellaneous Products industry’s gain of 22%. This was largely backed by the company’s aggressive merger and acquisition strategy.

Acquisitions have helped Trimble to build a comprehensive portfolio, enter new markets and generate additional revenues. The company announced two related acquisitions last Friday, that of Savcor Oy’s forestry business and Silvadata for an undisclosed amount.

Complementary Acquisitions

The acquisitions complement Trimble’s Connected Forest solutions that provide full raw materials lifecycle management solutions and are expected to boost the company’s forestry division.

Finland-based Savcor OY is a leading provider of forestry software. The company’s Zenith software information management solutions pertain to land acquisition, planning and evaluation, silviculture, harvesting and logistics. Its Wedge software provides online diagnostic solutions for forestry operations planning.

Silvadata, also Finland based, provides cloud-based data, collaboration and workflow automation services to small and medium-sized players of the forestry industry.  The company’s SilvaPro Software-as-a-Service (SaaS) is widely used for lifecycle management functions involving forest planning, management, wood procurement and execution.

Focus on Inorganic Growth

The acquisitions appear to be a part of Trimble’s bid to expand its international business, sustaining its focus on commercial applications that, while being more macro-sensitive, allow a more stable revenue stream and better profits.

The company has added a large number of companies over the past few years. In 2014, 2015 and 2016, it acquired 10, five and three companies, respectively as well as important assets of several others to complement its current business and capabilities.

Trimble Navigation Ltd. Revenue (TTM)

These acquisitions are small in comparison to Trimble, so there have been no integration issues. Rather, the acquisitions have facilitated market expansion and revenue buildup. The company also forms joint ventures to build a position in strategic areas. We expect acquisitions to remain an important growth driver going ahead.

Zacks Rank & Stocks to Consider

Currently, Trimble is a Zacks Rank #3 (Hold) stock.

Better-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , Advanced Energy Industries, Inc. (AEIS - Free Report) and Alibaba Group Holding Limited (BABA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For the current year, while estimates for Applied Materials went up 8.7%, the same for Advanced Energy and Alibaba remained unchanged in the past 30 days.

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