Should You Be Concerned With Trimble Inc’s (NASDAQ:TRMB) -14% Earnings Drop?
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Trimble Inc’s (NASDAQ:TRMB) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Check out our latest analysis for Trimble
Was TRMB’s recent earnings decline worse than the long-term trend and the industry?
TRMB’s trailing twelve-month earnings (from 30 September 2018) of US$163m has declined by -14% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -10%, indicating the rate at which TRMB is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Trimble has fallen short of achieving a 20% return on equity (ROE), recording 6.2% instead. Furthermore, its return on assets (ROA) of 3.8% is below the US Electronic industry of 5.3%, indicating Trimble’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Trimble’s debt level, has increased over the past 3 years from 5.3% to 6.2%.
What does this mean?
Though Trimble’s past data is helpful, it is only one aspect of my investment thesis. Generally companies that endure an extended period of diminishing earnings are going through some sort of reinvestment phase Though if the whole industry is struggling to grow over time, it may be a indicator of a structural shift, which makes Trimble and its peers a higher risk investment. You should continue to research Trimble to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for TRMB’s future growth? Take a look at our free research report of analyst consensus for TRMB’s outlook.
Financial Health: Are TRMB’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
