- Wondering if Trimble at around US$65.07 is offering value or asking you to pay up for quality? This article breaks down what the current price might be telling you.
- The stock is up 4.0% over the last 7 days, even though the 30 day and year to date returns stand at a 7.1% decline and a 16.9% decline respectively, while the 1 year and 3 year returns are 16.2% and 31.0%, and the 5 year return is a 20.0% decline.
- Recent coverage has focused on Trimble's position as a software driven solutions provider across multiple end markets and how that broad footprint can shape investor sentiment. This kind of context can influence how the market reacts to new contracts, partnerships, or shifts in spending by Trimble's customers.
- Trimble currently scores 4 out of 6 on Simply Wall St's valuation checks. Next up is a closer look at what those traditional valuation methods say about the stock, followed by a different way of thinking about value that ties everything together.
Approach 1: Trimble Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model projects a company’s future cash flows and discounts them back to today’s dollars, aiming to estimate what the entire business might be worth right now.
For Trimble, the model uses reported Free Cash Flow of about $353.5 million over the last twelve months and a series of projected cash flows out to 2035. Analyst estimates cover the next few years, and Simply Wall St extends those projections further, with 2035 Free Cash Flow forecast at about $1.88b, all expressed in $. These future figures are discounted back using a 2 Stage Free Cash Flow to Equity approach, which accounts for one growth pattern in an earlier period and another in a later period.
Adding those discounted cash flows together gives an estimated intrinsic value of about $105.84 per share. Compared with a current share price around $65.07, the model indicates that Trimble is trading at roughly a 38.5% discount to this DCF estimate, which points to a meaningful gap between price and calculated value.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Trimble is undervalued by 38.5%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.
Approach 2: Trimble Price vs Earnings
For profitable companies, the P/E ratio is a useful way to connect what you pay for each share with the earnings that support that price. It helps you gauge how much the market is willing to pay today for each dollar of current earnings.
What counts as a normal or fair P/E depends on how the market views a company’s growth prospects and risks. Higher growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually lines up with a lower P/E.
Trimble currently trades on a P/E of 35.90x. That sits close to the peer average of 36.46x and above the broader Software industry average of about 30.09x. Simply Wall St’s Fair Ratio for Trimble is 29.54x. This is its view of the P/E that would be reasonable given factors such as earnings growth profile, industry, profit margins, market cap and company specific risks.
This Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for those company specific drivers rather than assuming all software names deserve the same multiple. Comparing Trimble’s current 35.90x P/E with the Fair Ratio of 29.54x suggests the shares are trading above that fair value range.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Trimble Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so meet Narratives, where you spell out your view of Trimble’s future revenue, earnings and margins, link that story to a forecast, and see what fair value drops out, all inside Simply Wall St’s Community page that is already used by millions of investors.
With Narratives, you can set your own fair value and compare it with the current share price to decide whether Trimble looks worth adding, trimming, or just watching, and that view updates automatically as new earnings, news, or guidance arrive.
For Trimble, one investor might focus on cloud based software, subscription adoption and buybacks and land near the higher analyst target of US$103.0, while a more cautious investor, more focused on risks around government spending and competition, might sit closer to the lower US$79.0 target, and Narratives helps you see exactly what assumptions lead to each outcome.
Do you think there's more to the story for Trimble? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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