I first became aware of Trimble when I started researching precision agriculture. This budding field involves the application of positioning technologies like GPS to farming. Trimble's positioning solutions -- which extend to construction, transportation, and other industries -- are backed by more than 900 patents. That intellectual property portfolio should support the company's competitive position relative to other precision ag players like Raven Industries
Demand for Trimble's wares got socked this year along with other agricultural equipment suppliers like Lindsay
Having read some of Trimble's annual reports, I've come away very impressed with the culture in place here. The philosophy of being a solutions provider, rather than a mere product company, should serve the firm very well as it seeks to satisfy its customers' evolving needs.
Trimble can't be called cheap, with an enterprise value of around 18 times EBITDA and a trailing price-to-earnings multiple that's through the roof. That's the main reason I haven't seriously considered an investment in the company. This is a very fine business, though, as demonstrated by the firm's prodigious free cash flow. Based on the all-in excess cash flow metric I concocted earlier this year, Trimble's operations have covered its cash demands more than 2.5 times over, based on a five-year average. Fewer than 9% of U.S.-listed businesses with market capitalizations between $2 billion and $5 billion measure up to that standard.
So no, I'm not ready to add Trimble to my portfolio today, but it's a company I'm monitoring with great interest.