Why Trimble Navigation Limited Shares Tumbled Today

Is Trimble's plunge meaningful? Or just another movement?

May 7, 2014 at 5:26PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Trimble Navigation Limited (NASDAQ:TRMB) fell more than 16% early Wednesday and then partially recovered to close down around 8%, after the company reported weaker-than-expected first quarter results.

So what: Quarterly sales rose 9% year over year to $604.7 million. This translated to a 5% increase in adjusted net income to $102.6 million, or $0.39 per diluted share. Analysts, on average, were expecting net income of $0.42 per share on sales of $618.2 million.

For the current quarter, Trimble expects revenue between $605 million and $630 million, with adjusted earnings per share in the range of $0.38 to $0.42. The midpoints of both ranges sits below analysts' models, which called for second-quarter earnings of $0.42 per share on sales of $618.2 million. 

Now what: Trimble CEO Steven Berglund elaborated, "The shortfall to expectation was focused in the North American agriculture business, which was adversely affected by a number of factors including weather conditions." To Trimble's credit, Berglund went on to note every other segment saw double-digit revenue growth and significantly increased profitability, and they believe their long-term growth prospects remain unchanged.

As a result, today's pullback in Trimble shares shouldn't discourage long-term investors. Keep in mind, though, Trimble still likely will need to endure some more volatility in its agriculture business in the coming quarters, so I personally prefer keeping it on my watchlist for the time being. Once the dust settles and those struggles begin to abate, patient investors should have plenty of time to build long-term positions.

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Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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