Should Investors Take a Fresh Look at Trimble After Strong 28% Share Price Surge?

Curious about whether it’s finally time to buy, hold, or cash out of Trimble? You’re definitely not alone. The stock’s journey lately has had both longtime fans and curious newcomers watching closely. Over the past year, Trimble’s shares have surged an impressive 28.3%, and while the most recent month saw a dip of 1.1%, that is barely a blip for investors focused on the bigger picture. Year-to-date, the stock is up another 13.6%, which shows that market interest is far from fading despite short-term volatility.

Much of this momentum stems from evolving market dynamics in Trimble’s key sectors, with technology and infrastructure trends adding sparks of optimism and, at times, caution when it comes to risk perception. The company’s long-term growth story is still being written, but those steady five-year gains of 51.4% show that patience has paid off for dedicated shareholders.

Of course, headline growth numbers don’t tell the whole story. When we dig into the fundamentals, valuation always looms large in any investment decision. According to a six-point checklist of undervaluation metrics, Trimble earns a value score of 3. That means it appears undervalued in half of the categories our analysis considers, which is promising but not quite a slam dunk.

Let’s break down what that value score really means by exploring the different ways investors weigh a company’s price tag. And stick around: after we cover the usual methods, I’ll share a perspective on valuation that many overlook but could make all the difference.

Why Trimble is lagging behind its peers

Approach 1: Trimble Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates how valuable a company is by projecting its future cash flows and then discounting them back to today’s dollars to reflect their present value. For Trimble, this approach uses free cash flow (FCF) data, starting with the latest twelve-month FCF of $278.6 Million and relying on analyst input and reasonable growth estimates for the coming years.

Over the next decade, Trimble's free cash flow is projected to climb steadily, reaching roughly $1.5 Billion by 2028 and potentially $3.1 Billion by 2035, according to long-range scenarios. While only five years of estimates are compiled from external analysts, the farther-away figures result from extending observed growth rates into the future. These projections offer a forward-looking lens on what Trimble could generate, and all are based in US dollars.

Running this cash flow trajectory through a two-stage DCF model puts Trimble's intrinsic, or fair, value at approximately $166.40 per share. With the stock trading at a 52.4 percent discount to that estimated value, the model suggests the market price is meaningfully below where it should be based on future cash potential.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Trimble.

Our Discounted Cash Flow (DCF) analysis suggests Trimble is undervalued by 52.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Trimble Price vs Earnings

For profitable companies like Trimble, the price-to-earnings (PE) ratio is a widely used valuation metric. It tells investors how much they are paying for each dollar of current earnings, providing a straightforward snapshot of whether a stock is trading at a premium or discount compared to its earnings power.

What is considered a "normal" or "fair" PE ratio is influenced by several factors. Higher growth prospects tend to justify higher PE multiples, as investors are willing to pay up for future potential. On the other hand, greater risks or lower growth can pull the fair PE lower.

Currently, Trimble trades at a PE ratio of 65.7x. That is notably higher than both the Electronic industry average of 25.5x and the average among its peers at 44.3x. However, headline comparisons do not always tell the full story. Simply Wall St’s proprietary "Fair Ratio" for Trimble is 35.8x. This figure is more tailored, taking into account Trimble’s growth outlook, profit margins, market cap, industry trends, and company-specific risks. The Fair Ratio offers a more comprehensive benchmark than simple peer or industry averages, so it is a more reliable yardstick for judging valuation.

Comparing Trimble’s current PE of 65.7x to its Fair Ratio of 35.8x suggests the stock is significantly above what the company’s fundamentals would warrant at this time.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Trimble Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is the personal story or perspective you bring to a company like Trimble, connecting your beliefs about its future (for example, how fast revenue might grow, what margins could be, or where profitability will land) to a financial model that leads to your own fair value estimate.

Narratives go beyond the numbers by linking the “why” behind your assumptions to the company’s growth drivers, risks, and unique business context. On Simply Wall St’s Community page, millions of investors use Narratives to express their individual outlooks, quickly compare their fair value to the current share price, and see how those estimates change with the latest news or earnings reports.

With Narratives, you do not just follow analyst targets; you instantly see diverse viewpoints side-by-side. For Trimble, some investors use optimistic Narratives based on rapid AI-powered software adoption and a price target near $100, while more cautious participants focus on margin risks or macro challenges and estimate fair value as low as $84.

This dynamic tool puts flexible, story-driven investing in your hands, helping you decide whether to buy, hold, or sell as new company developments unfold in real time.

Do you think there's more to the story for Trimble? Create your own Narrative to let the Community know!

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.

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