Don't let the headline numbers fool you -- positioning and workflow technology company Trimble (TRMB 1.40%) is a growth stock. In fact, its key growth metric (annualized recurring revenue, or ARR) is growing at a mid-teens rate, which makes it a stock well worth buying for growth investors.
What Trimble does
The company's traditional positioning hardware (used to precisely track and guide equipment, vehicles, and field positions) and, more importantly, its growing software solutions (which gather data from its hardware to improve a customer's workflows) are gathering traction with investors.
If it's hard to grasp Trimble's solutions conceptually, consider a precisely managed construction project, where every piece of steel and every delivery truck is monitored, such as transportation management. These are real-time activities that optimize their customers' daily workflow.
Trimble's growth prospects
While the headline Wall Street analyst forecasts call for a 4.5% decline in revenue in 2025, followed by just 6.9% growth in 2026, the reality is that its ARR is set to grow at a 13%-15% rate in 2025. The discrepancy comes from Trimble's existing noncore businesses and the ongoing shift in revenue from hardware to recurring software revenue.
That's something that will significantly boost free cash flow (FCF) growth, as management noted on the last earnings call: "We run negative working capital," and capital expenditures are "less than 1% of revenue on a trailing-12-month basis."
In other words, its business model doesn't tie up cash in inventory or waiting for customers to pay, and it doesn't have high capital spending requirements either.
Image source: Getty Images.
That's part of the reason why Wall Street sees Trimble growing FCF $436 million in 2025 to almost $1 billion in 2027. With a current market cap of just $19.2 billion, hitting the 2027 estimate would make the stock appear to be an excellent value, particularly for a company growing ARR at a mid-teens rate.
