Intrinsic value of Trimble Inc. - TRMB

Previous Close

$40.15

  Intrinsic Value

$31.87

stock screener

  Rating & Target

sell

-21%

Previous close

$40.15

 
Intrinsic value

$31.87

 
Up/down potential

-21%

 
Rating

sell

We calculate the intrinsic value of TRMB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  3,487
  3,888
  4,309
  4,750
  5,212
  5,694
  6,197
  6,720
  7,264
  7,830
  8,418
  9,029
  9,665
  10,325
  11,011
  11,725
  12,467
  13,240
  14,046
  14,884
  15,759
  16,671
  17,623
  18,616
  19,654
  20,739
  21,872
  23,057
  24,297
  25,594
Variable operating expenses, $m
  2,797
  3,069
  3,355
  3,655
  3,968
  4,296
  4,637
  4,992
  5,362
  5,746
  5,717
  6,132
  6,564
  7,012
  7,478
  7,963
  8,467
  8,992
  9,539
  10,109
  10,703
  11,322
  11,969
  12,644
  13,348
  14,085
  14,855
  15,659
  16,501
  17,383
Fixed operating expenses, $m
  262
  267
  273
  279
  285
  292
  298
  305
  311
  318
  325
  332
  340
  347
  355
  363
  371
  379
  387
  396
  404
  413
  422
  432
  441
  451
  461
  471
  481
  492
Total operating expenses, $m
  3,059
  3,336
  3,628
  3,934
  4,253
  4,588
  4,935
  5,297
  5,673
  6,064
  6,042
  6,464
  6,904
  7,359
  7,833
  8,326
  8,838
  9,371
  9,926
  10,505
  11,107
  11,735
  12,391
  13,076
  13,789
  14,536
  15,316
  16,130
  16,982
  17,875
Operating income, $m
  429
  551
  681
  816
  958
  1,107
  1,262
  1,423
  1,591
  1,766
  2,376
  2,565
  2,761
  2,965
  3,178
  3,399
  3,629
  3,869
  4,119
  4,380
  4,652
  4,936
  5,232
  5,541
  5,865
  6,203
  6,557
  6,927
  7,314
  7,720
EBITDA, $m
  984
  1,122
  1,266
  1,418
  1,577
  1,743
  1,916
  2,096
  2,284
  2,480
  2,683
  2,894
  3,114
  3,342
  3,579
  3,827
  4,084
  4,352
  4,632
  4,923
  5,227
  5,544
  5,875
  6,220
  6,582
  6,959
  7,354
  7,768
  8,200
  8,653
Interest expense (income), $m
  27
  106
  127
  148
  171
  195
  220
  246
  273
  301
  330
  361
  393
  425
  460
  495
  532
  571
  611
  652
  696
  741
  788
  837
  889
  942
  998
  1,057
  1,118
  1,182
  1,248
Earnings before tax, $m
  322
  425
  532
  645
  764
  887
  1,016
  1,150
  1,290
  1,435
  2,015
  2,172
  2,336
  2,506
  2,683
  2,867
  3,059
  3,259
  3,467
  3,684
  3,911
  4,147
  4,394
  4,653
  4,923
  5,205
  5,500
  5,809
  6,133
  6,471
Tax expense, $m
  87
  115
  144
  174
  206
  240
  274
  311
  348
  388
  544
  586
  631
  677
  724
  774
  826
  880
  936
  995
  1,056
  1,120
  1,186
  1,256
  1,329
  1,405
  1,485
  1,568
  1,656
  1,747
Net income, $m
  235
  310
  389
  471
  557
  648
  742
  840
  942
  1,048
  1,471
  1,586
  1,705
  1,829
  1,958
  2,093
  2,233
  2,379
  2,531
  2,689
  2,855
  3,028
  3,208
  3,396
  3,593
  3,799
  4,015
  4,241
  4,477
  4,724

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,482
  7,226
  8,009
  8,829
  9,688
  10,584
  11,518
  12,491
  13,503
  14,554
  15,648
  16,783
  17,964
  19,191
  20,466
  21,793
  23,174
  24,611
  26,107
  27,666
  29,292
  30,987
  32,756
  34,603
  36,532
  38,547
  40,654
  42,857
  45,161
  47,573
Adjusted assets (=assets-cash), $m
  6,482
  7,226
  8,009
  8,829
  9,688
  10,584
  11,518
  12,491
  13,503
  14,554
  15,648
  16,783
  17,964
  19,191
  20,466
  21,793
  23,174
  24,611
  26,107
  27,666
  29,292
  30,987
  32,756
  34,603
  36,532
  38,547
  40,654
  42,857
  45,161
  47,573
Revenue / Adjusted assets
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
Average production assets, $m
  2,162
  2,410
  2,671
  2,945
  3,231
  3,530
  3,842
  4,166
  4,504
  4,855
  5,219
  5,598
  5,992
  6,401
  6,827
  7,269
  7,730
  8,209
  8,708
  9,228
  9,771
  10,336
  10,926
  11,542
  12,186
  12,858
  13,561
  14,295
  15,064
  15,868
Working capital, $m
  133
  148
  164
  181
  198
  216
  235
  255
  276
  298
  320
  343
  367
  392
  418
  446
  474
  503
  534
  566
  599
  634
  670
  707
  747
  788
  831
  876
  923
  973
Total debt, $m
  2,347
  2,747
  3,167
  3,608
  4,069
  4,550
  5,052
  5,574
  6,117
  6,682
  7,269
  7,879
  8,513
  9,172
  9,857
  10,569
  11,311
  12,082
  12,886
  13,723
  14,596
  15,507
  16,457
  17,448
  18,484
  19,566
  20,698
  21,881
  23,118
  24,413
Total liabilities, $m
  3,481
  3,880
  4,301
  4,741
  5,202
  5,684
  6,185
  6,708
  7,251
  7,816
  8,403
  9,013
  9,647
  10,305
  10,991
  11,703
  12,444
  13,216
  14,019
  14,857
  15,730
  16,640
  17,590
  18,582
  19,618
  20,700
  21,831
  23,014
  24,252
  25,546
Total equity, $m
  3,001
  3,346
  3,708
  4,088
  4,485
  4,900
  5,333
  5,783
  6,252
  6,739
  7,245
  7,771
  8,317
  8,885
  9,476
  10,090
  10,729
  11,395
  12,088
  12,810
  13,562
  14,347
  15,166
  16,021
  16,914
  17,847
  18,823
  19,843
  20,910
  22,026
Total liabilities and equity, $m
  6,482
  7,226
  8,009
  8,829
  9,687
  10,584
  11,518
  12,491
  13,503
  14,555
  15,648
  16,784
  17,964
  19,190
  20,467
  21,793
  23,173
  24,611
  26,107
  27,667
  29,292
  30,987
  32,756
  34,603
  36,532
  38,547
  40,654
  42,857
  45,162
  47,572
Debt-to-equity ratio
  0.780
  0.820
  0.850
  0.880
  0.910
  0.930
  0.950
  0.960
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
  1.050
  1.060
  1.070
  1.070
  1.080
  1.080
  1.090
  1.090
  1.090
  1.100
  1.100
  1.100
  1.110
  1.110
Adjusted equity ratio
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  235
  310
  389
  471
  557
  648
  742
  840
  942
  1,048
  1,471
  1,586
  1,705
  1,829
  1,958
  2,093
  2,233
  2,379
  2,531
  2,689
  2,855
  3,028
  3,208
  3,396
  3,593
  3,799
  4,015
  4,241
  4,477
  4,724
Depreciation, amort., depletion, $m
  556
  570
  586
  602
  618
  636
  654
  673
  693
  714
  307
  329
  352
  377
  402
  428
  455
  483
  512
  543
  575
  608
  643
  679
  717
  756
  798
  841
  886
  933
Funds from operations, $m
  791
  880
  974
  1,073
  1,176
  1,284
  1,396
  1,513
  1,635
  1,762
  1,778
  1,915
  2,057
  2,206
  2,360
  2,520
  2,688
  2,862
  3,043
  3,232
  3,430
  3,636
  3,851
  4,075
  4,310
  4,556
  4,813
  5,082
  5,363
  5,658
Change in working capital, $m
  14
  15
  16
  17
  18
  18
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
Cash from operations, $m
  777
  865
  958
  1,056
  1,158
  1,265
  1,377
  1,493
  1,614
  1,740
  1,756
  1,892
  2,033
  2,181
  2,334
  2,493
  2,659
  2,832
  3,012
  3,200
  3,396
  3,601
  3,814
  4,038
  4,271
  4,515
  4,770
  5,036
  5,316
  5,608
Maintenance CAPEX, $m
  -113
  -127
  -142
  -157
  -173
  -190
  -208
  -226
  -245
  -265
  -286
  -307
  -329
  -352
  -377
  -402
  -428
  -455
  -483
  -512
  -543
  -575
  -608
  -643
  -679
  -717
  -756
  -798
  -841
  -886
New CAPEX, $m
  -235
  -248
  -261
  -274
  -286
  -299
  -312
  -324
  -337
  -351
  -365
  -379
  -394
  -409
  -426
  -443
  -460
  -479
  -499
  -520
  -542
  -566
  -590
  -616
  -643
  -672
  -703
  -735
  -769
  -804
Cash from investing activities, $m
  -348
  -375
  -403
  -431
  -459
  -489
  -520
  -550
  -582
  -616
  -651
  -686
  -723
  -761
  -803
  -845
  -888
  -934
  -982
  -1,032
  -1,085
  -1,141
  -1,198
  -1,259
  -1,322
  -1,389
  -1,459
  -1,533
  -1,610
  -1,690
Free cash flow, $m
  429
  490
  555
  625
  699
  776
  858
  943
  1,032
  1,124
  1,105
  1,206
  1,310
  1,419
  1,532
  1,649
  1,771
  1,898
  2,030
  2,168
  2,311
  2,461
  2,616
  2,779
  2,948
  3,126
  3,311
  3,504
  3,706
  3,918
Issuance/(repayment) of debt, $m
  379
  400
  420
  441
  461
  481
  502
  522
  543
  565
  587
  610
  634
  659
  685
  712
  741
  772
  804
  837
  873
  910
  950
  992
  1,036
  1,082
  1,131
  1,183
  1,237
  1,295
Issuance/(repurchase) of shares, $m
  91
  34
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  470
  434
  420
  441
  461
  481
  502
  522
  543
  565
  587
  610
  634
  659
  685
  712
  741
  772
  804
  837
  873
  910
  950
  992
  1,036
  1,082
  1,131
  1,183
  1,237
  1,295
Total cash flow (excl. dividends), $m
  899
  924
  976
  1,066
  1,160
  1,258
  1,359
  1,465
  1,575
  1,689
  1,692
  1,816
  1,944
  2,078
  2,217
  2,362
  2,513
  2,670
  2,834
  3,005
  3,184
  3,371
  3,566
  3,771
  3,984
  4,208
  4,442
  4,687
  4,944
  5,213
Retained Cash Flow (-), $m
  -327
  -345
  -362
  -380
  -398
  -415
  -433
  -450
  -468
  -487
  -506
  -526
  -547
  -568
  -591
  -614
  -639
  -665
  -693
  -722
  -753
  -785
  -819
  -855
  -893
  -933
  -975
  -1,020
  -1,067
  -1,116
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  572
  579
  613
  686
  762
  843
  927
  1,015
  1,107
  1,202
  1,186
  1,290
  1,398
  1,510
  1,626
  1,747
  1,873
  2,005
  2,141
  2,283
  2,432
  2,586
  2,747
  2,916
  3,091
  3,275
  3,466
  3,667
  3,877
  4,096
Discount rate, %
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
  538
  510
  501
  517
  527
  530
  526
  514
  497
  473
  405
  378
  347
  314
  279
  244
  210
  177
  146
  119
  95
  74
  56
  42
  30
  21
  15
  10
  6
  4
Current shareholders' claim on cash, %
  99.1
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8
  98.8

Trimble Inc., formerly Trimble Navigation Limited, is engaged in providing technology solutions that enable professionals and field mobile workers to transform their work processes. The Company’s solutions are used across a range of industries, including agriculture, architecture, civil engineering, survey and land administration, construction, geospatial, government, natural resources, transportation and utilities. The Company's business segments include Building and Infrastructure, Geospatial, Resource and utilities and Transportation. The Buildings and Infrastructure segment serves customers working in architecture, engineering, construction and operations and maintenance. The Geospatial segment primarily serves customers working in surveying, engineering, government and land management. The Resources and Utilities segment serves customers working in agriculture, forestry, and utilities. The Transportation segment serves customers working in transportation.

FINANCIAL RATIOS  of  Trimble Inc. (TRMB)

Valuation Ratios
P/E Ratio 76.4
Price to Sales 4.3
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 24.8
Price to Free Cash Flow 26.5
Growth Rates
Sales Growth Rate 3.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -40.9%
Cap. Spend. - 3 Yr. Gr. Rate -18.2%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 21.2%
Total Debt to Equity 26.9%
Interest Coverage 8
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 4.5%
Ret/ On T. Cap. - 3 Yr. Avg. 5.2%
Return On Equity 5.8%
Return On Equity - 3 Yr. Avg. 6.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 52.4%
Gross Margin - 3 Yr. Avg. 52.9%
EBITDA Margin 16.6%
EBITDA Margin - 3 Yr. Avg. 17.6%
Operating Margin 7.7%
Oper. Margin - 3 Yr. Avg. 8.4%
Pre-Tax Margin 7.5%
Pre-Tax Margin - 3 Yr. Avg. 8.4%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 6.6%
Effective Tax Rate 25.4%
Eff/ Tax Rate - 3 Yr. Avg. 21.8%
Payout Ratio 0%

TRMB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TRMB stock intrinsic value calculation we used $3108 million for the last fiscal year's total revenue generated by Trimble Inc.. The default revenue input number comes from 0001 income statement of Trimble Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TRMB stock valuation model: a) initial revenue growth rate of 12.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.3%, whose default value for TRMB is calculated based on our internal credit rating of Trimble Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Trimble Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TRMB stock the variable cost ratio is equal to 81.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $256 million in the base year in the intrinsic value calculation for TRMB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Trimble Inc..

Corporate tax rate of 27% is the nominal tax rate for Trimble Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TRMB stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TRMB are equal to 62%.

Life of production assets of 17 years is the average useful life of capital assets used in Trimble Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TRMB is equal to 3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2674.4 million for Trimble Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 251.509 million for Trimble Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Trimble Inc. at the current share price and the inputted number of shares is $10.1 billion.

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