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Trimble's (TRMB) Q3 Earnings Beat Estimates, Revenues lag

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Trimble Inc. (TRMB - Free Report) delivered non-GAAP earnings of 49 cents per share in the third quarter of 2018, which surpassed the Zacks Consensus Estimate by 4 cents.

The figure increased 25.6% on a year-over-year basis but decreased 13.6% sequentially.

Coming to price performance, the stock has lost6.5% on a year-to-date basis compared with the industry’s decline of 8.5%.

 

 

Revenues

Revenues in the third quarter increased 19% year over year to $804.7 million. However, the figure missed the Zacks Consensus Estimate of $807 million.

The year-over-year growth in revenues was driven by the strong performance of its segments. Further, the company recorded robust organic growth of more than 10%. Moreover, acquisitions contributed 9% to the top-line growth of the company.

Product revenues (62.8% of the total revenues) came in at $499.7 million, up 11.2% on a year-over-year basis. Services revenues (25.9% of revenues) came in at $156.5 million, up 25.9% year over year. Subscription revenues (17.5% of revenues) increased 35.6% from the year-ago quarter to $139 million.

Operating Details

In the third quarter, gross margin came in at 57.9%, expanding 200 basis points (bps) year over year. The increase was attributed to a favorable product mix.

Operating expenses were $325.4 million in the third quarter, expanding 22.1%from the year-ago quarter.

Non-GAAP operating margin came in at 20.8%, expanding 210 bps year over year, driven by strong organic growth.

Balance Sheet & Cash Flow

As of Sep 30, 2018, cash and cash equivalents were $205.4 million, decreasing from $571 million in the last reported quarter. Inventories were $286.3 million, increasing from $282.4 million in the second quarter.

Long-term debt was $1.79 billion at the end of third quarter compared with $1.29 billion at the end of second quarter.

Cash flow from operations was $117 million in the quarter under review versus $185 million in the last reported quarter.

Guidance

For fourth-quarter 2018, Trimble expects non-GAAP earnings between 44 cents and 48 cents per share. The Zacks Consensus Estimate for the same is pegged at 46 cents per share.

The company expects non-GAAP revenues between $791 million and $821 million. The corresponding Zacks Consensus Estimate stands at $827.5 million.

Trimble Inc. Price, Consensus and EPS Surprise

 

Trimble Inc. Price, Consensus and EPS Surprise | Trimble Inc. Quote

Zacks Rank and Stocks to Consider

Trimble currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are boohoo group plc (BHOOY - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AMETEK, Inc. (AME - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for boohoo group, IAC/InterActiveCorp and AMETEK is currently pegged at 25%, 15% and 10.97%, respectively.

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