Please ensure Javascript is enabled for purposes of website accessibility

Why Shares in Trimble Rose 10% in August

By Lee Samaha – Updated Sep 3, 2021 at 12:30PM

Key Points

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of Cathie Wood's favorite stocks outperformed last month.

What happened

Shares in positioning technology company Trimble (TRMB -0.13%) rose 10.2% in August, according to data provided by S&P Global Market Intelligence. The move comes on the back of a couple of positive pieces of news flow. The first was an excellent set of second-quarter earnings released at the start of the month. More on that in a moment.

The second was the announcement on Aug. 19 of a new $750 million share repurchase program. Investors often see share repurchase authorizations positively for stock prices as company buying provides underlying support for the stock.

A space truss construction.

Trimble's solutions help customers with the positioning needs, such as points on space trusses during construction. Image source: Getty Images.

In the earnings report, management declared it had exceeded expectations in the second quarter and promptly raised revenue and earnings guidance for the second time this year. Management started the year forecasting full-year adjusted earnings per share of $2.25-$2.45, and then raised its guidance to $2.30-$2.50 on the first-quarter earnings call and then again to $2.45-$2.65 on the second-quarter earnings call.

So what

The good news on earnings and guidance demonstrates the recovery in many of Trimble's end markets in 2021. As a reminder, Trimble's positioning technology precisely positions and models customers' physical assets or activities. Key end markets include the geospatial industry (mapping, etc.), transportation (real-time tracking of truck fleets, etc.), buildings and infrastructure (construction), and resources and utilities.

All four segments grew strongly in the second quarter leading to the company reporting an overall 27% increase in organic sales in the quarter.

Now what

With Trimble's end markets now firmly in recovery mode, investors can look forward to the company developing its long-term growth aims. These include becoming an integrated part of its customers' daily workflow and consequently growing its software and recurring revenue. Meanwhile, advancements in software and analytics (for example, in precision agriculture) will open up new markets and applications and increase the value of Trimble's hardware and software solutions. 

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Trimble Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Trimble Inc. Stock Quote
Trimble Inc.
$61.04 (-0.13%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.