Trimble Navigation: Positioned for Growth

Trimble Navigation Ltd. (TRMB) is a leading innovator and provider of advanced location-based solutions, typically to commercial and government users. It integrates and provides its expertise in Global Positioning Systems [GPS] and data collection systems, enabling the management of large amounts of geo-referenced information. The Company is also involved with a variety of other applications including lasers, optical and inertial technologies with software sets, wireless communications and services for complete commercial solutions.

Trimble Navigation designs and markets its own products and it is operational through four segments:

Engineering and Construction - The first segment addresses the parameters of improved productivity and accuracy throughout the entire construction process, including the initial survey, planning, design, site preparation and building phases. This is accomplished by involving Trimble's technologically advanced optical surveying system - S6 Total Station, VX Spatial Station, GCS family of Grade Control Systems, Spectra Precision Laser portable tools and Proliance. All these applications are intended to provide information flow from one step to the next.

Field Solutions - The second segment of the company addresses the agriculture and geographic information system markets. The products sold in this segment include, AgGPS Autopilot System - GPS-enabled , AgGPS EZ-Steer System, GeoExplorer 2005 Series and Spacient Fieldport Software, AgGPS and '06's EZ-Boom 2010.

Mobile Solutions - The third segment addresses solutions for vehicles and mobile workers by providing both hardware and software in managing mobile work and mobile assets. The products offered by this segment include Trimble Fleet Productivity, Trimble Consumer Packaged Goods and Trimble Public Safety.

Advanced Devices - The fourth and last segment includes product lines from the company's Component Technologies, Applanix, Trimble Outdoors, and Military and Advanced Systems [MAS] businesses. The Advanced Devices segment has an agreement with u-Nav Microelectronics to license Trimble GPS technology for u-Nav GPS chipsets. It also has a co-operative licensing deal with Nokia for Trimble's GNSS patents related to designated wireless products and services involving location technologies, such as GPS and assisted GPS.

Trimble's global operations include development, manufacturing and logistics operations in Sweden, Germany, New Zealand, France, Canada, the Netherlands, India and the United States. With over 700 patents in its portfolio, this company has the broadest positioning solutions portfolio in the industry.

Key points

The competitive nature of the four business segments under which Trimble operates is not very congested, suggesting that there is plenty of room for continued market penetration and subsequent growth. One part of the overall company's effective strategy is to target each business segment and make acquisitions in order to respond to changing market conditions. Tremblin's latest acquisition was Germany's Ingenieurburo Breining which according to the company will improve its ability to customize survey for the German markets.

Tremblin is part of the wireless equipment commercial enterprise, which has proven to be an excellent industry over the past five to ten years. The industry itself has experienced significant expansion year after year prompted, among other influences, by the commercial sector which is constantly looking for new ways to become more efficient and apply this efficiency in their business.

With continued advances in technology further enabling commercial deployments of wireless networks, great business opportunities continue to emerge in the GPS space. Global positioning systems and related products have become quite prevalent. Many businesses are adopting this type of technology and merging it with their current infrastructures, thus improving their efficiency and in the process create better customer service. Consequently, companies with leading positions such as Tremblin, with more sophisticated systems and superior products, are benefiting revenue/wise and dominating the markets allowing a higher level of efficiency and performance among users. GPS units are selling at a high rate with companies realizing significant profits to their balance sheets.

Conclusion

Based on these facts and more importantly on that of the global positioning systems being the technology that will continue to push businesses into higher productivity, companies involved in this segment of the wireless equipment industry, especially those in the leading positions such as Trimble Navigation Ltd., with its worldwide presence and unique capabilities, position the company for higher growth in emerging markets allowing it to significantly gain from the momentum and the future growth prospects that the industry is currently experiencing.

Tremblin' s market cap stands at $4.71 billion. Profit margins 10.44%. Operating margins 15.23%. Revenues $1.08 billion for a gross profit of $462 million and a $113 million in net income. Its return on equity came in at almost 14% with a current ratio of 2.12. Quarterly earnings growth yoy posted at almost 23%.

On July 31st, the company issued its third-quarter guidance saying it expects third-quarter revenue to grow 25 percent to 27 percent, in the range of $294 million and $299 million and that it sees third-quarter earnings per share between 18 cents and 20 cents.

This year's earnings estimates have increased to $1.20 per share. Next year's estimates have risen to $1.45 per share.

One detail also worth mentioning: in the last five quarters the company posted four double-digit earnings surprises. Increased retention of business and increased production are the primary causes for the increase in revenues.

In short, growth continues to remain part of Tremblin's picture.

Technically,the stock's five year chart speaks volume. On its yearly chart, the ticker just staged a nice breakout of a one-month base. The old resistance level has become the new support line.

TRMB should continue uptrending from its current levels with mid - short term price target of $49.

Disclosure: Author has a long position in TRMB

Comments

[Daniel W]

I own Hemisphere GPS. If you like TRMB, definitely check out HEM (on the Toronto exchange)--one of the last few value plays left in the ag sector...

[User 110140]

Please check your spelling of Trimble - I don't know who Tremblin is unless you are referring to Trimble's competition :-)

[jmmx]

Tremblin - who is this? about 6 references no intorduction.

[futuresFvalue]

Meant Trimble there rather than tremblin and my apologies. I ware glasses for a reason...seems though need thicker ones at this point. My apologies again.