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Trimble Hits 52-Week High on Buyouts, Expanding Portfolio

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Shares of Trimble Inc (TRMB - Free Report) have rallied to a new 52-week high of $40.30, eventually closing a bit lower at $40.14 on Sep 19. The outperformance can be attributed to the company’s expanding product portfolio driven by frequent acquisitions and consistent execution, which are driving top-line growth and profitability.

We note that Trimble has beaten the Zacks Consensus Estimate for earnings in all of the trailing four quarters with an average positive surprise of 7.09%.

Last quarter, earnings surged 26.9% year over year to 33 cents on revenues of $662 million, up 8.6%. Revenues surpassed the Zacks Consensus Estimate of $641 million and also the company’s guided range of $625-$655 million.

The Zacks Consensus Estimate for 2017 and 2019 has been steady at $1.43 and $1.64 over the last 30 days.
 

Trimble Navigation Ltd. Price, Consensus and EPS Surprise

 

Trimble Navigation Ltd. Price, Consensus and EPS Surprise | Trimble Navigation Ltd. Quote

Trimble has a market cap of $10.04 billion. The stock has returned 33.2% year to date, substantially outperforming the industry it belongs to.



 

Key Growth Factors

Trimble is an original equipment manufacturer (“OEM”) of GPS-based products and control systems. The company’s aggressive acquisition strategy is helping it to rapidly expand product portfolio, improve competitive positions and enter new markets. Trimble’s joint ventures with Nikon, Hilti and Caterpillar (CAT - Free Report) are also driving growth.

Trimble has added a large number of companies to its portfolio in the last few years. Notable takeovers in 2017 are 10-4 Systems, Innovative Software Engineering (ISE), Muller-Elektronik, BOS Forestry, and Savcor Oy’s forestry business and Silvadata.

These acquisitions have expanded Trimble’s Transportation, Agriculture Management and Forest solutions portfolio. Moreover, they have aided the company to expand in markets like Germany, Finland and Canada.

The expanding portfolio is also helping Trimble win deals frequently. The company recently inked OEM deals with Sumitomo, Komatsu and Yutong.

We also note that Trimble’s initiatives toward lowering the cost structure is helping in improving profits. Operating margins expanded 340 basis points to 22.6% in the last quarter. The company expects operating margin expansion to continue, going forward.

Zacks Rank & Key Picks

Currently, Trimble holds a Zacks Rank #3 (Hold). Garmin Limited (GRMN - Free Report) and Control4 Corporation (CTRL - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), are stocks worth considering in the same sector.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Garmin and Control4 is pegged at 8.4% and 15%, respectively.

 

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