Shareholders of Trimble Inc. (NASDAQ:TRMB) will be pleased this week, given that the stock price is up 12% to US$58.21 following its latest yearly results. It looks like the results were a bit of a negative overall. While revenues of US$3.8b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.2% to hit US$1.25 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the eleven analysts covering Trimble provided consensus estimates of US$3.64b revenue in 2024, which would reflect a small 4.2% decline over the past 12 months. Per-share earnings are expected to surge 25% to US$1.57. In the lead-up to this report, the analysts had been modelling revenues of US$3.84b and earnings per share (EPS) of US$1.60 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The analysts have also increased their price target 8.6% to US$64.49, clearly signalling that lower revenue forecasts next year are not expected to have a material impact on Trimble's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Trimble analyst has a price target of US$68.00 per share, while the most pessimistic values it at US$57.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 4.2% by the end of 2024. This indicates a significant reduction from annual growth of 4.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Trimble is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Trimble. Long-term earnings power is much more important than next year's profits. We have forecasts for Trimble going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Trimble (1 is potentially serious!) that you need to take into consideration.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.