Trimble (TRMB)

Geospatial technology provider Trimble (NASDAQ:TRMB) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 2.9% year on year to $901.2 million. Guidance for next quarter’s revenue was better than expected at $947 million at the midpoint, 1.4% above analysts’ estimates. Its non-GAAP profit of $0.81 per share was 13% above analysts’ consensus estimates.

Company Overview

Playing a role in the construction of the Paris Grand, Trimble (NASDAQ:TRMB) offers geospatial devices and technology to the agriculture, construction, transportation, and logistics industries.

Industrial Internet of Things (IoT) companies are buoyed by the secular trend of a more connected world. They often specialize in nascent areas such as hardware and services for factory automation, fleet tracking, or smart home technologies. Those who play their cards right can generate recurring subscription revenues by providing cloud-based software services, boosting their margins. On the other hand, if the technologies these companies have invested in don’t pan out, they may have to make costly pivots.

Competitors offering similar products include Topcon (NASDAQ:TOPCF), Autodesk (NASDAQ:ADSK), Samsara (NYSE:IOT), and Garmin (NASDAQ:GRMN).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Trimble’s sales grew at a sluggish 2.8% compounded annual growth rate over the last five years. This was below our standards and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Trimble’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.7% annually.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Trimble’s organic revenue averaged 5.5% year-on-year growth. Because this number is better than its two-year revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results.

This quarter, Trimble reported modest year-on-year revenue growth of 2.9% but beat Wall Street’s estimates by 3.5%. Company management is currently guiding for a 3.7% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 1.6% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector.

For industrials businesses, cost of sales is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics in the short term and a company’s purchasing power and scale over the long term.

Trimble has best-in-class unit economics for an industrials company, enabling it to invest in areas such as research and development. Its margin also signals it sells differentiated products, not commodities. As you can see below, it averaged an elite 63.3% gross margin over the last five years. Said differently, roughly $63.26 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

Trimble produced a 68.9% gross profit margin in Q3, in line with the same quarter last year. On a wider time horizon, Trimble’s full-year margin has been trending up over the past 12 months, increasing by 3.8 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Trimble’s operating margin has risen over the last 12 months and averaged 13.6% over the last five years. On top of that, its profitability was top-notch for an industrials business, showing it’s an well-run company with an efficient cost structure. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Trimble’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Trimble generated an operating margin profit margin of 16.7%, up 3.4 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Trimble’s EPS grew at an unimpressive 7.1% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 2.8% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Trimble’s earnings can give us a better understanding of its performance. A five-year view shows that Trimble has repurchased its stock, shrinking its share count by 4.9%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Trimble, its two-year annual EPS growth of 7% is similar to its five-year trend, implying stable earnings.

In Q3, Trimble reported adjusted EPS of $0.81, up from $0.70 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Trimble’s full-year EPS of $3.02 to grow 8.4%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Trimble has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 13.6% over the last five years.

Taking a step back, we can see that Trimble’s margin dropped by 12 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Trimble’s free cash flow clocked in at $116.6 million in Q3, equivalent to a 12.9% margin. This result was good as its margin was 2.8 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends trump fluctuations.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Trimble historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.4%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Trimble’s ROIC averaged 3.6 percentage point decreases each year. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Trimble reported $232.7 million of cash and $1.39 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.02 billion of EBITDA over the last 12 months, we view Trimble’s 1.1× net-debt-to-EBITDA ratio as safe. We also see its $69 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Trimble blew past analysts’ organic revenue expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 4.6% to $82.19 immediately after reporting.

Updated: December 4, 2025 at 10:12 PM EST

Before making an investment decision, investors should account for Trimble’s business fundamentals and valuation in addition to what happened in the latest quarter.

Trimble doesn’t pass our quality test. First off, its revenue growth was weak over the last five years. And while its admirable gross margins indicate the mission-critical nature of its offerings, the downside is its cash profitability fell over the last five years. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Trimble’s P/E ratio based on the next 12 months is 24.4x. This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $98.45 on the company (compared to the current share price of $82.21).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.