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Trimble (TRMB) Down 0.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Trimble Navigation (TRMB - Free Report) . Shares have lost about 0.1% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Trimble’s Q3 Earnings Beat Estimates, Revenues lag

Trimble Inc. 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.

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 company expects non-GAAP revenues between $791 million and $821 million.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

At this time, Trimble has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Trimble has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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