Trimble Inc (TRMB)

Conclusion

Trimble Inc sells technology for construction, geospatial and transportation work, including construction software, positioning services and the Transporeon freight platform. At 54.68 USD on 2026-11-09 the market capitalisation is 12.75 billion USD, and the enterprise value is 14.07 billion USD.

The verdict is fair. Today's EV/EBITDA of 67.3 sits far above its ten-year median of 21.3, while the price-to-free-cash-flow of 11.7 sits well below its median of 27.2. The DCF gives 51.58 USD per share at a discount rate of 11.52%, and the fair value from historical multiples is 68.92 USD. The fair value band runs from 48.20 to 72.30 USD with a midpoint of 60.25 USD, a margin of safety of 10.2%. The reverse DCF implies growth of 4.95% a year, against five-year revenue growth of 2.65% and a five-year decline in free cash flow per share of 25.6%.

What holds the case up is the earnings record: eight beats in eight quarters, an accrual ratio of 0.4%, and a five-year share count decline of 1.0% a year. What would break it is leverage and returns. Net debt to EBITDA is 6.31, interest coverage is 0.91, and ROIC of 0.95% sits well below a WACC of 10.75%.

Financial health

Financial strength is red, held back by net debt to EBITDA of 6.31 and interest coverage of 0.91, while the Altman Z-score of 3.04 is in the safe zone. The current ratio is 0.93 and the quick ratio is 0.57, both below one, and debt to equity is 0.31. The Altman model was designed for manufacturers, so its reading is only indicative for a technology company. Insolvency risk is low, about 0.4% by the estimate of the Ohlson model over one to two years, based on 2025 year-end figures. Current leverage is the main concern: an operating income that barely covers interest leaves little room if earnings fall.

Earnings quality

Earnings quality is green. Free cash flow conversion is 70.3% on a five-year basis, but the trailing twelve-month figure is not available. The accrual ratio is 0.4%, and stock-based compensation is 3.8% of revenue, leaving free cash flow after stock compensation at 947 million USD. The share count fell by 1.0% a year over five years, consistent with buybacks. The Piotroski score is 4 out of 9, and the Beneish M-score of -2.28 points to an unlikely risk of earnings manipulation. The company beat estimates in all eight of the last eight quarters, with an average surprise of 9.5%. Next-year estimates rose 1.4% over 90 days, with twelve upward revisions in the last 30 days for the current year and none downward.

Profitability

Profitability is red. The gross margin of 68.9% is above its ten-year median of 55.7%, and the operating margin of 16.6% is above its median of 12.2%. The net margin is -4.1%, against a ten-year median of 12.0%, so earnings were negative over the trailing twelve months. Return on invested capital is 0.95%, against a WACC of 10.75%, a gap of -9.79% as given. The five-year median ROIC is 8.87%. The DuPont split for 2025 shows a net margin of 11.8%, an asset turnover of 0.39 and an equity multiplier of 1.60. Return on equity of -3.2% is therefore not inflated by leverage; it is depressed by the recent loss.

Growth

Growth is green. Revenue compounded at -0.8% over three years, 2.7% over five years and 4.6% over ten years. Earnings per share compounded at -0.5%, 2.7% and 14.2% over the same periods. Free cash flow per share fell at 26.4% over three years and 25.6% over five years, and declined 7.4% a year over ten years. Revenue grew in seven of the last ten comparable years. The next-year earnings estimate implies growth of 12.7%, which is the main support for the green colour.

Valuation

Valuation is yellow, because the verdict is fair with a margin of safety of 10.2%. Against ten-year medians, EV/EBITDA is 67.3 against 21.3, a premium of 215.7%, while price to free cash flow is 11.7 against 27.2, a discount of 57.2%. Price to sales is 3.31 against 3.91, a discount of 15.2%, and price to book is 2.56 against 3.44, a discount of 25.5%. The current earnings multiple is not meaningful because earnings were negative. The DCF gives 51.58 USD per share at a discount rate of 11.52%, with a terminal growth rate of 2.5%. The fair value band is 48.20 to 72.30 USD, and the fair value from historical multiples is 68.92 USD. The reverse DCF implies growth of 4.95%. The company pays no dividend.

Risks

Net debt to EBITDA of 6.31 and interest coverage of 0.91 leave little margin if operating profit falls, and a higher interest bill would push earnings further into the red. ROIC of 0.95% below a WACC of 10.75% means that new investment currently destroys value unless returns improve. The five-year decline in free cash flow per share of 25.6% shows that the earnings record has not translated into per-share cash growth. The trailing twelve-month free cash flow conversion and the current earnings multiple are not available. This analysis has no debt maturity schedule and no revenue split by segment, so refinancing risk and the mix of construction and transportation earnings cannot be assessed.