It has been about a month since the last earnings report for Trimble Navigation (TRMB). Shares have added about 4.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Trimble due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Trimble Q3 Earnings Beat Estimates, Revenues Declined Y/Y

Trimble delivered non-GAAP earnings of 70 cents per share in the third quarter of 2024, surpassing the Zacks Consensus Estimate by 12.9%. The reported figure increased 2.9% year over year.

Revenues of $875.8 million beat the Zacks Consensus Estimate by 1.1% but declined 8.5% year over year (3% up on an organic basis).

Product revenues (35.1% of total revenues) were $307.6 million, down 30.7% year over year. Subscription and services revenues (64.9% of total revenues) increased 10.7% year over year to $568.2 million.

TRMB generated annualized recurring revenues (ARR) of $2.19 billion, which increased 13% year over year (up 14% on an organic basis).

TRMB’s Quarterly Details

The AECO (Architecture, Engineering, Construction, and Owners) segment’s revenues (34.9% of total revenues) were $306 million, up 13.5% year over year.

The AECO segment delivered 18% ARR growth, led by successful product and go-to-market innovations, contributing to strong Annual Contract Value booking growth and the adoption of common back-end systems.

Field Systems revenues (42.8% of total revenues) of $374.6 million fell 24.4% year over year. The segment achieved 19% ARR growth, driven by Positioning Services, Trimble Catalyst positioning-as-a-service, Works Plus and the launch of the subscription version of Trimble Business Center.

T&L revenues (22.3% of total revenues) of $195.2 million climbed 1.5% year over year. The segment saw 5% ARR growth, with Transporeon achieving a double-digit rise and Maps experiencing high-single-digit ARR growth.

In the third quarter of 2024, the non-GAAP gross margin was 68.5%, expanding 350 basis points (bps) year over year.

On a non-GAAP basis, operating expenses accounted for 42.8% of total revenues, up 410 bps year over year.

The non-GAAP operating margin was 25.7%, contracting 30 bps year over year.

Trimble’s Balance Sheet Remains Strong

At the end of the third quarter of 2024, cash and cash equivalents were $1036.9 million, up from $944.1 million at the end of the second quarter of 2024.

Total debt was $1.79 billion at the end of the third quarter, remaining unchanged from the previous quarter.

The free cash flow was $88.5 million compared with the previous quarter’s $73.3 million.

TRMB Raises 2024 Guidance

For the fourth quarter of 2024, Trimble expects revenues of $925-$965 million.

The non-GAAP operating margin is likely to be 28.5-30%.

The company anticipates non-GAAP earnings per share between 83 cents and 91 cents. 

For 2024, Trimble expects revenues between $3.625 billion and $3.665 billion on a reported basis, indicating year-over-year growth of more than 3.5-4.5%. Adjusted revenues are anticipated between $3.54 billion and $3.58 billion, implying organic growth of more than 6-7%. 

ARR is likely to grow more than 11-13% on a reported and organic basis.

Trimble anticipates an adjusted operating margin of 25.8-26.1%.

Non-GAAP earnings are expected between $2.79 and $2.87 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Trimble has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Trimble has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Trimble is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Illinois Tool Works (ITW), a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended September 2024 more than a month ago.

Illinois Tool Works reported revenues of $3.97 billion in the last reported quarter, representing a year-over-year change of -1.6%. EPS of $2.65 for the same period compares with $2.55 a year ago.

For the current quarter, Illinois Tool Works is expected to post earnings of $2.50 per share, indicating a change of +3.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Illinois Tool Works. Also, the stock has a VGM Score of D.

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