A month has gone by since the last earnings report for Trimble Navigation (TRMB Quick QuoteTRMB - Free Report) . Shares have added about 18.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Trimble due for a pullback? 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 Q1 Earnings & Revenues Beat Estimates

Trimble reported first-quarter 2020 non-GAAP earnings of 49 cents per share, beating the Zacks Consensus Estimate by 19.5%. The bottom line also improved 8.9% year over year but declined 7.5% sequentially.

Per management, non-GAAP revenues decreased 1% year over year and 3.9% on a sequential basis to $794 million.

Further, the company’s GAAP revenues came in $792.3 million, which surpassed the Zacks Consensus Estimate of $783 million. However, the figure was down 1% from the year-ago quarter and 3.8% from the prior quarter.

The top line was impacted by weakness in the overall demand environment owing to the coronavirus pandemic. Further, sluggishness in the Geospatial and Transportation segments remained a headwind during the reported quarter.

Nevertheless, the company witnessed strong performance by Resources and Utilities and Buildings and Infrastructure segments in the first quarter. Further, acquisition benefits remained tailwinds.

Product revenues (58.5% of GAAP revenues) totaled $463.8 million, down 5% on a year-over-year basis. Services revenues (20.5% of revenues) came in at $162.4 million, up 2% year over year. Subscription revenues (21% of revenues) improved 7.8% from the year-ago quarter to $166.1 million.

Trimble continues to anticipate persistent headwinds in the global economy owing to coronavirus pandemic. Consequently, the company has refrained from providing guidance for the remaining 2020.

Nevertheless, the company remains optimistic regarding cost control strategies, which are expected to aid profitability in the near term. Further, the company’s acquisition strategy remains a major positive and is likely to aid the stock rebound in the long haul.

Segments in Detail

Buildings and Infrastructure: This segment generated sales of $296.9 million, accounting for 37.4% of the company’s non-GAAP revenues, improving 1% on a year-over-year basis. Notably, strong performance by civil construction business drove year-over-year sales in this segment despite coronavirus-induced disruptions.

Geospatial: Sales from this segment were $146.2 million, accounting for 18.4% of total revenues. The figure decreased 9.3%, compared with the year-ago quarter primarily on account of weak demand due to decline in oil prices. Further, coronavirus induced shelter-in-place protocol remained a headwind. Additionally, decreasing dealers’ inventories were concerns.

Resources and Utilities: The segment generated sales of $180.3 million, accounting for 22.7% of total revenues. The figure improved 13% on a year-over-year basis. Although coronavirus outbreak impacted the company’s OEM business negatively, solid customer demand courtesy of the anticipation of shutdowns in distribution and manufacturing facilities drove the segment’s top line. Further, rising demand for aftermarket products and correction services in the agricultural sector was a positive.

Transportation: Sales from this segment went down 9.8% from the year-ago quarter to $170.6 million, accounting for 21.5% of total revenues. Coronavirus-induced crisis situation hurt the freight demand. Further, challenges associated with implementation of the ELD mandate in Trimble’s telematics business remained headwinds.

Operating Details

In the first quarter, non-GAAP gross margin came in at 59.1%, expanding 110 basis points (bps) year over year.

Adjusted operating expenses accounted for 38.8% of non-GAAP revenues, expanding 10 bps compared with the year-ago quarter.

Further, non-GAAP operating margin came in at 20.3%, which expanded 90 bps year over year.

Balance Sheet

At the end of first-quarter 2020, cash and cash equivalents were $216.8 million, up from $189.2 million at the end of fourth-quarter 2019. Inventories were $327.2 million, up from $312.1 million in the previous quarter.

Long-term debt was $1.7 billion at the end of the first quarter, compared with $1.6 billion at the end of the fourth quarter.

Further, the company generated $155.7 million of cash from operations compared to $122 million in the previous quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

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 looks promising. Notably, Trimble has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.