Trimble Inc. TRMB recently entered into a definitive agreement to acquire Azteca Systems in a bid to bolster its capabilities in the enterprise asset management (EAM) space.
Notably, Azteca Systems, doing business as Cityworks, is based in Sandy, UT, and offers robust office, cloud and mobile EAM software solutions. The company has a solid momentum in the mid-sized utility and local government market segments of North America.
We believe this will help Trimble gain traction across the customers by ensuring management and optimization of assets across the entire infrastructure lifecycle.
Moreover, Trimble is expected to deliver better experience to the Architecture, Engineering and Construction (AEC) firms and software system integrators with Cityworks’ integrated solutions.
Additionally, Cityworks’ EAM software is anticipated to strengthen Trimble’s utilities and local government capabilities which in turn will drive growth in the Resources and Utilities segment.
Enterprise Asset Management Holds Promise
Per a report from MarketsandMarkets, the global EAM market is expected to hit $5.1 billion in 2019 and see a CAGR of 10% between 2019 and 2024. Further, the market is likely to reach $8.2 billion by 2024.
Per a report from Adroit Market Research, this particular market is anticipated to hit $8.49 billion by 2025 at a CAGR of 10.2% from 2018.
Further, a report from Prescient & Strategic Intelligence suggests that the EAM market is likely to register a CAGR of 13.5% between 2019 and 2025.
Growing need for reducing maintenance and procurement expenses and boosting asset lifecycle simultaneously is driving demand for EAM.
We believe Trimble’s latest move positions it well to tap this booming market.
Trimble Inc. Revenue (TTM)
Trimble Inc. revenue-ttm | Trimble Inc. Quote
Resources and Utilities to Grow
We note that Cityworks will join Trimble’s Resources and Utilities segment, which primarily caters to the agricultural market by serving customers engaged in forestry, utilities and agriculture.
The acquisition is expected to expand the segment’s integrated solutions portfolio on completion. The deal is expected to be completed in fourth-quarter 2019.
Hence, the Cityworks buyout agreement remains a major positive step of Trimble and is likely to aid revenue generation within the segment. Notably, Resources and Utilities generated $152.7 million (17.8% of total revenues) in second-quarter 2019, up 5.1% year over year.
Zacks Rank & Stocks to Consider
Trimble carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader technology sector are Itron ITRI, Five9 FIVN and Paylocity Holding Corporation PCTY. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Itron, Five9 and Paylocity is currently pegged at 25%, 10% and 20%, respectively.
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