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Trimble: Acquisitions Creating Growth Through Synergies

Francesco Infusino profile picture
Francesco Infusino


  • Trimble reported earnings recently and had strong EPS as well as 2023 guidance.
  • The company's acquisition strategy has created synergies for the long-term such as with their purchase of Transporeon.
  • Assuming my DCF assumptions, TRMB stock is currently overvalued, resulting in a hold rating.

Transport and logistic concept, Manager and engineer checking and control logistic network distribution and customer data for logistic Import export on global network background


Trimble (NASDAQ:TRMB) has exemplified strong and consistent growth throughout the past few decades. With strong organic growth along with synergies through acquisitions, I rate the stock as a hold due to its overvaluation in a recessionary climate.


This article was written by

Francesco Infusino profile picture
I am a driven business student who is interested in finding value stocks with a fit future for the long term.      I am associated with a fellow contributor, Jishan Sidhu as we are part of the same investment club.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (7)

Did you just copy the calculation for the DFC? This is extremely wrong. Looking at the listed website you seemed just to have copied the whole calculation without even looking that the site. It didn't use actual data for their growth estimates and just assumes it decline to 3% over 5 years which is a generic generated growth decline rate. That's definitely not based on any analysts. The site assumes a terminal growth rate of 1.3% after 5 years which is crazy. This is not good a basis for long term analysis and explains why your result is so unreasonable.

Edit: Actually fiddling with it. A big reason for this is that you didn't adjust the terminal growth rate and it just mapped a linear decline to your terminal growth rate which is set 0. You literally had to add only a terminal value to add minimum value and somehow failed to do so.
ric koehler profile picture
I STRONGLY disagree with your Fair Value estimate $37.70. I guess it depends on what assumptions you use (or maybe on what you've consumed recently). You are implying a PE Ratio of about 18 using company's recent 2023 EPS guidance. All you write about Trimble as a company is spot on - tho they face macro headwinds, Trimble demonstrates they thrive, with rising margins and creating synergies from acquisitions. In short, Trimble executes. The stock price deserves pricing as a growth stock, with a PE closer to its historic 25 to 30. A minimum price target of $60 is reasonable.

But a question: why has stock price decreased as company fundamentals improve? Perhaps the recent positive reaction to Earnings Report is changing that direction.
Francesco Infusino profile picture
@ric koehler Regarding my assumptions, I utilized the company's projections for revenues and factored in margin expansion due to synergies that the company will utilize. I believe that Trimble should not be valued as a growth stock as the company as annual revenue for 2022 was $3.676B, a 0.47% increase from 2021 and their guidance provides a mid-single-digit growth rate into the following years. Along with that, I decided to add a risk premium to my assumptions to better factor in the potential headwinds ahead. Without such a risk premium, the stock would be much closer to fair value. But, if you believe that the company is intentionally underestimating its OWN revenue growth rates and you would feel comfortable investing by carelessly leaving macro headwinds out of the picture, then it could be a great "growth" stock.
Kinda feels like a mismatch between what you say and feel. As you express good things about the company, growth from sinergies but also.dont go into detail in their business units, yet claim.it will keep going down
Francesco Infusino profile picture
@JB170 on a value perspective I believe the price may be too high, but I do have confidence in the company’s ability to grow in the long term, hence the hold rating.
@Francesco Infusino why the lowe P/E then? seems like that would be given to a stagnant business.
Francesco Infusino profile picture
@JB170 Trimble currently has a P/E of ~25 with a forward P/E of 16.77 which is positive in regards to earnings growth and exemplifies that these earnings are already priced in. Also, it is expected that Trimble continues to grow in the mid to high single digits in regards to revenue and continues to expand margins. That is why I rated Trimble as a hold as the company is not stagnant, but is overvalued when compared to their growth rate.
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