TRIMBLE INC. (TRMB): what the price requires

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TRMB

Headline

Field	Value
Ticker	TRMB
Company	TRIMBLE INC.
Sector / Industry	Technology / Scientific Instruments
Current price	$52.17/sh
Composition	Product 32% / Subscription and services 68%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin needed	19.4%
Operating margin today	14.6%
Margin expansion implied	+4.8pp
Must persist for	6.7y
Multiple paid	25x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.4% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.

Reconcile: at the x-ray's 9.3% required return this reads ~23.4%/yr; the models below use their own rates.

How unusual the bet is: elevated

Reference	Value
vs own history	+0.59σ
cohort percentile (of 177 peers)	44
sustained it ~6.7 years at this level	23%
implied end-window share	0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	2.68x	5	expensive
Earnings	3.08x	5	expensive
Relative	1.34x	5	expensive
Growth	1.32x	3	expensive

Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$37.31	1.40x	yes	FCF base $0.5B, growth 3% (input: historical growth), terminal g 3.5%, WACC 8.4%, 5yr projection
DCF Exit Multiple	Growth	$48.80	1.07x	yes	Exit EV/EBITDA: 17.7x / 19.7x / 21.7x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$38.92	1.34x	yes	P/E 20.73x (blended: static sector reference 18x + trailing (TTM) 27x), scenarios: 17.4x / 20.7x / 24.1x (bear / base = reference held flat / bull), EV/EBITDA 14.3x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$20.82	2.51x	yes	BV/sh $23.80, ROE (TTM) 8.1%, ke 9.3%
Two-Stage Excess Return	Asset	$19.45	2.68x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$39.47	1.32x	yes	Rev $3.7B, growth 3% (input: historical growth; tapered), Terminal P/S: 2.8x / 3.4x / 3.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$66.85	0.78x	yes	EPS $1.91, growth 35% (input: historical EPS growth), PEG=0.77 (Undervalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$16.08	3.24x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.54B × (1−25%) / WACC 8.4% → EPV (no growth)
Residual Income	Asset	$19.24	2.71x	yes	BV $23.80 + 5yr PV of (ROE (TTM) 8.1% − Kₑ 9.3%) × BV; BV grows 5.3%/yr
Graham Number	Asset	$31.98	1.63x	yes	√(22.5 × EPS $1.91 × BVPS $23.80) — Graham's conservative floor
EV/EBITDA Relative	Relative	$29.89	1.75x	yes	EBITDA $0.69B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$16.95	3.08x	yes	FCF $480.5M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$10.11	5.16x	yes	SBC-adj FCF $0.33B (FCF $0.48B − SBC $0.15B) capitalized at Kₑ
Ben Graham Formula	Earnings	$61.63	0.85x	yes	EPS $1.91 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$4.50	11.59x	yes	BV $23.80 × (ROIC 1.6% / WACC 8.4%)
P/Sales Sector	Relative	$38.90	1.34x	yes	Revenue $3.69B × sector P/S 2.5x
PEG Fair Value	Relative	$71.62	0.73x	yes	EPS $1.91 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$20.65	2.53x	yes	EPS $1.91 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$1.2b
Net debt / NOPAT (after-tax)	3.01x
Net debt / operating income (pre-tax)	2.27x
Interest coverage	6.9x
Share count CAGR (buyback)	-1.6%
Burning cash	no

Bullet Takeaways

• Trimble is mid-way through converting a positioning-hardware company into a vertical-software company, and the flywheel metric is annualized recurring revenue, a record $2.43 billion and up 13% organically in the March quarter; the 10-K defines it plainly: "ARR represents the estimated annualized value of recurring revenue".
• The risk is that the price already credits a long runway: no valuation family reaches it, and management spent $558.8 million on buybacks over the trailing year, 122% of net income, at 27x trailing GAAP earnings.
• Watch the second-quarter print against guidance of $938 to $963 million in revenue, and the reported exploration of a Transportation and Logistics unit sale, the next step in a multi-year portfolio pruning.

Bull Case

The market is pricing Trimble like a decent industrial; the fundamentals are printing like a software company hitting its stride. Today's price works out to about 25x operating income, which sounds demanding until you look at what the business just did: revenue up 11.8% year over year in the March quarter, operating income up 47.7%, GAAP earnings per share up 55.6%, and a record $2.43 billion of annualized recurring revenue growing 13% organically. Management raised full-year guidance on the strength, to $3.835 to $3.915 billion of revenue with organic ARR growth of 12% to 14%. Against its vertical-software comparables, the multiple actually sits in the lower half of the peer range, which is the gap the bull is buying.

The transformation has a paper trail rather than a slide deck. The company now describes itself in two segments, Product and Subscription and services, and the 10-K anchors the recurring base in a disclosed metric: "ARR represents the estimated annualized value of recurring revenue", calculated from actual subscription and maintenance contracts, not aspiration. Gross margin ran between 68.3% and 72.0% across the last four quarters, software-grade economics, and the portfolio has been actively pruned toward them: the precision-agriculture business went into the PTx Trimble joint venture where Trimble retains a 15% stake, the mobility business was sold in 2024, and reports indicate the Transportation and Logistics unit may be next. Each divestiture trades cyclical hardware exposure for concentration in the connected-software core.

The cash flow funds the story without strain. Trailing free cash flow of $480 million converts 105% of net income, debt sits at just 0.25x equity, and the company repurchased $558.8 million of stock over the trailing year while the share count fell. A company guiding its own operating margin toward the high twenties on a non-GAAP basis, compounding a recurring-revenue base in the teens, and shrinking its share count is doing the three things that re-rate a multiple, all at once.

Bear Case

Look first at where the cash is going. Management spent $558.8 million on buybacks over the trailing year, 122% of net income, at a price every family of valuation method sits below, while the company itself earns an 8.1% return on equity. Buying back more than you earn, at a premium to what earnings power supports, is a bet that the transformation multiple arrives before the arithmetic matters. The quality checklist has quiet flags in the same direction: profitability signals are perfect, but the leverage-and-liquidity block scores zero of three, with debt not declining, the current ratio slipping, and share issuance offsetting some of the repurchase. And this is a company that has now sold or ventured out its agriculture, mobility, and possibly transportation businesses in three years; serial divestiture can be focus, but it can also be a portfolio shrinking toward the only parts that still grow.

The price meanwhile requires an unusually long runway. At about 25x operating income, the market is paying for growth held near the company's maximum self-funded pace for roughly seven years, and historically only about 22% of comparable fast growers sustained that. No valuation family reaches the price: earnings-power methods sit at 3.7x below it, asset-based at 3.3x, and even peer multiples and forward-growth methods land about 40% short. Part of the gap is an earnings-definition question: the GAAP record shows $1.91 of trailing earnings per share, a 27.4x multiple, while the guidance investors quote is a non-GAAP figure nearly twice as high. The re-rating case leans on the flattering definition.

The end markets are the third leg of the risk. Trimble sells into construction, agriculture, and freight, all cyclical, with a hardware component that the filing notes is hard to forecast because "a portion of our hardware revenue occurs from orders received and" shipped within the same period. Trade policy cuts directly at the model, with the 10-K warning of "customers favoring domestic suppliers that could compete with or replace our products" and of "Geopolitical tensions and military conflicts, including the effects of significant trade barriers". And the software moat itself faces a new class of entrant: the same filing concedes that "Generative AI may also enable other parties to rapidly develop products and functionality that compete with our product offerings". Seven years is a long time to hold a ceiling-pace growth assumption against that list.

Valuation

The bet embedded in $52.83 (July 10, 2026) is about duration, not level. Unwinding the price says the market is paying roughly 25x operating income, which requires operating growth held near the self-funding ceiling for about seven years. The near-term pace is within what Trimble has recently delivered, and the margin ask is modest: the business needs about a 19.6% operating margin over the long run and earns about 17.3% today, with company guidance pointing meaningfully higher on an adjusted basis. What history questions is the longevity, since only about 22% of comparable fast growers sustained such a pace for seven years.

No method family reaches the price, but the distances tell a story. Peer multiples and forward-growth methods land closest, both about 40% below, while earnings-power methods sit at 3.7x below and asset-based at 3.3x. That shape says the market is paying for the recurring-revenue mix shift the trailing GAAP record does not yet fully show: the ARR base the price credits is a real disclosed figure, "calculated by taking our subscription and maintenance and support revenue for the current quarter" and annualizing contracted amounts, and it stands at $2.43 billion growing 13% organically. Two framings of the same company coexist here: against the scientific-instruments sector median of 18x earnings and 12x EV/EBITDA the stock looks rich at 27.4x and 19.9x, while against the vertical-software cohort it trades in the lower half of the range; the multiple the market settles on depends on which comparison set wins as subscription revenue keeps gaining share.

The balance sheet keeps the downside orderly. Debt runs at 0.25x equity, leverage is well covered, and free cash flow of $480 million converts more than all of net income, funding both the buyback and the transformation. The exposure is not solvency but definition: if the market ever reprices Trimble on its GAAP earnings power rather than its software trajectory, the 40% gap to the nearest method family is the measure of the fall, and the seven-year growth assumption is what holds that gap open.

Catalysts

The May print reset guidance upward and set the marks to test. Trimble reported March-quarter revenue of $940 million, up 11.8% year over year and 4% above consensus, with non-GAAP earnings of $0.79 per share beating estimates by 9.7%, and raised its full-year 2026 outlook to $3.835 to $3.915 billion of revenue with non-GAAP earnings of $3.47 to $3.64 per share, organic ARR growth of 12% to 14%, and a non-GAAP operating margin of 27.9% to 28.5%. Second-quarter guidance calls for revenue of $938 to $963 million and non-GAAP earnings of $0.78 to $0.82 per share, so the summer print is a straightforward pass-fail against those ranges, with the organic ARR growth rate the single number that carries the software re-rating case.

Portfolio action is the other live catalyst. Reports that Trimble may sell its Transportation and Logistics unit lifted the shares when they surfaced, and a completed transaction would continue the sequence that moved precision agriculture into the PTx Trimble joint venture, where Trimble holds 15% alongside AGCO's 85%, and sold the mobility business in 2024. Each step concentrates the company on its construction and geospatial software core and hands management more capital, which the trailing year says gets deployed into buybacks, $558.8 million of them. The tension to watch through year-end is external: trade policy and tariff shifts touch both the hardware bill of materials and, as the 10-K notes, customer preferences for domestic suppliers, so any escalation lands directly on the guided margin range.

Peer Cohorts (Per Segment, With Filing Citations)

AECO (reported)

• ADSK (AUTODESK, INC.)
• (no filing in the citation store)
• PCOR (Procore Technologies, Inc.)
• (no filing in the citation store)
• BSY (BENTLEY SYSTEMS, INCORPORATED)
• (no filing in the citation store)
• PTC (PTC Inc.)
• (no filing in the citation store)

Field Systems (reported)

• GRMN (GARMIN LTD)
• (no filing in the citation store)
• CGNX (Cognex Corporation)
• (no filing in the citation store)
• ZBRA (ZEBRA TECHNOLOGIES CORPORATION)
• (no filing in the citation store)

T&L (reported)

• DSGX (DESCARTES SYSTEMS GROUP INC)
• (no filing in the citation store)
• MANH (MANHATTAN ASSOCIATES, INC.)
• (no filing in the citation store)
• SPSC (SPS COMMERCE, INC.)
• (no filing in the citation store)
• GLBE (Global-E Online Ltd.)
• (no filing in the citation store)

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings, May 2026 · Q1 2026 earnings call; FreightWaves · Zacks Q1 2026 earnings coverage, May 2026 · AGCO announcement · FreightWaves · Q1 2026 guidance, May 2026 · Q1 2026 earnings release, May 2026