Trimble Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Investors in Trimble Inc. (NASDAQ:TRMB) had a good week, as its shares rose 2.3% to close at US$73.04 following the release of its yearly results. It looks like a credible result overall - although revenues of US$3.1b were what the analysts expected, Trimble surprised by delivering a (statutory) profit of US$1.55 per share, an impressive 39% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Trimble

Taking into account the latest results, the most recent consensus for Trimble from 13 analysts is for revenues of US$3.34b in 2021 which, if met, would be an okay 6.0% increase on its sales over the past 12 months. Statutory earnings per share are forecast to sink 12% to US$1.36 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.34b and earnings per share (EPS) of US$1.36 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target rose 12% to US$76.58despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Trimble's earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Trimble at US$84.00 per share, while the most bearish prices it at US$44.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Trimble's past performance and to peers in the same industry. We would highlight that Trimble's revenue growth is expected to slow, with forecast 6.0% increase next year well below the historical 8.3%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that Trimble is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. 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 estimates - from multiple Trimble analysts - going out to 2023, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Trimble that you should be aware of.

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This article by Simply Wall St is general in nature. 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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