DCF Studio

    TRMB · NMS · Technology

    Trimble Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 17.29

    Market price

    USD 57.56

    Implied upside

    -70.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages just 0.97% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.05% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 17.29-70.0%
    Exit multiple
    USD 36.77-36.1%
    Market price
    USD 57.56

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m293m587mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.6bnUSD 3.5bnUSD 3.5bnUSD 3.5bnUSD 3.4bn-0.8%
    EBITUSD 513.4mUSD 509.2mUSD 505.1mUSD 501.0mUSD 496.9m-0.8%
    NOPATUSD 416.5mUSD 413.1mUSD 409.7mUSD 406.4mUSD 403.1m-0.8%
    Add depreciation & amortisationUSD 205.8mUSD 204.2mUSD 202.5mUSD 200.9mUSD 199.2m-0.8%
    Less capital expenditureUSD -37.4mUSD -37.1mUSD -36.8mUSD -36.5mUSD -36.2m-0.8%
    Less increase in working capitalUSD 1.9mUSD 1.9mUSD 1.9mUSD 1.9mUSD 1.8m+0.8%
    Free cashflow to firmUSD 586.9mUSD 582.1mUSD 577.3mUSD 572.6mUSD 568.0m-0.8%
    Discount factor0.94860.85360.76810.69120.6220-
    Present valueUSD 556.7mUSD 496.9mUSD 443.5mUSD 395.8mUSD 353.3m-10.7%
    Present Value Of The ForecastUSD 2.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.243Reported 1.362, pulled toward 1.0 (Blume)
    Cost of equity11.83%Risk-free + beta x equity risk premium
    Cost of debt5.35%Interest expense / average total debt
    Market capitalisationUSD 13.4bn90.6% of capital
    Total debtUSD 1.4bn9.4% of capital, book value as a proxy
    Tax rate18.9%Effective, capped at statutory
    WACC11.13%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 17.29

    58% of EV

    Forecast FCFF, final year
    USD 568.0m
    Capex at depreciation, working capital in reinvestment
    USD 535.4m
    Less reinvestment at g/ROIC (22.5% of NOPAT)
    USD -120.3m
    Capitalised
    USD 415.1m
    ROIC (WACC floor)
    11.1%
    Terminal value, undiscounted
    USD 4.9bn
    Terminal value, discounted
    USD 3.1bn
    Enterprise value
    USD 5.3bn
    Less net debt
    USD 1.1bn
    Equity value
    USD 4.2bn

    Exit at 17.9x EBITDA

    Value per shareUSD 36.77

    78% of EV

    Terminal value, undiscounted
    USD 12.5bn
    Terminal value, discounted
    USD 7.8bn
    Enterprise value
    USD 10.0bn
    Less net debt
    USD 1.1bn
    Equity value
    USD 8.9bn

    Spread between methods: 72%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.13%21.6221.7021.7821.8721.95
    10.13%19.1719.2419.3119.3919.46
    11.13%17.1617.2317.2917.3517.41
    12.13%15.4815.5415.5915.6515.70
    13.13%14.0614.1114.1514.2014.25

    Outlined: this model. Green text: above today's price of 57.56. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-0.8%27.3%+28.1pp
    EBIT margin14.4%50.4%+35.9pp
    Discount rate11.1%4.6%-6.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.