Trimble's Software Growth Potential Significant, Market Cap Could Increase by 31.4%
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Source: Fool
- Software Revenue Share Increase: Trimble's software and services now account for nearly 80% of its business, indicating a shift towards higher-margin subscription models that enhance overall profitability and cash flow.
- Annual Recurring Revenue Growth: Management expects Trimble's annual recurring revenue (ARR) to grow at a low double-digit to mid-teens annual rate through 2027, driving improvements in profit margins and cash flow, thereby strengthening market competitiveness.
- Cash Flow Growth Potential: Trimble's free cash flow (FCF) is projected to increase from approximately $750 million in 2025 to $1 billion in 2027, representing a 15% annual growth rate, which will provide ample funding for future investments and expansions.
- Market Valuation Upside: If Trimble trades at a 30 times FCF multiple in 2027, its market cap could reach $30 billion, while a conservative 25 times multiple would still elevate its market cap to $25 billion, reflecting a 31.4% increase from the current stock price.
Analyst Views on TRMB
Wall Street analysts forecast TRMB stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for TRMB is 98.43 USD with a low forecast of 94.00 USD and a high forecast of 102.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
8 Analyst Rating
8 Buy
0 Hold
0 Sell
Strong Buy
Current: 78.350
Low
94.00
Averages
98.43
High
102.00
Current: 78.350
Low
94.00
Averages
98.43
High
102.00
About TRMB
Trimble Inc. is a global technology company. The Company's segments include Architects, Engineers, Construction and Owners (AECO), Field Systems, and Transportation and Logistics (T&L). The AECO segment primarily serves customers working in architecture, engineering, construction, design, asset management, operations, and maintenance. Within this segment, its substantial product portfolios are software solutions focused on design, engineering, building and civil construction, capital planning, and asset management software. The Field Systems segment primarily serves customers working in surveying and mapping, civil construction, building construction field services, and positioning systems. Within this segment, its substantial product portfolios are hardware and software solutions focused on geospatial, civil engineering construction, and positioning services. The T&L segment provides a suite of solutions for shippers, carriers, and intermediaries globally.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
