What is TRMB's Intrinsic value?

Trimble Inc (TRMB) Intrinsic Value Analysis

Executive Summary

As of April 7, 2026, Trimble Inc's estimated intrinsic value ranges from $30.88 to $78.35 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $78.35 +20.4%
Discounted Cash Flow (5Y) $62.03 -4.7%
Dividend Discount Model (Multi-Stage) $46.25 -28.9%
Dividend Discount Model (Stable) $40.71 -37.4%
Earnings Power Value $30.88 -52.5%

Is Trimble Inc (TRMB) undervalued or overvalued?

With the current market price at $65.07, the stock appears to be moderately overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Trimble Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.95 0.99
Cost of equity 8.3% 10.4%
Cost of debt 4.8% 6.3%
Tax rate 16.8% 18.5%
Debt/Equity ratio 0.09 0.09
After-tax WACC 7.9% 10.0%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 8.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $3,587 (FY01-2026) to $8,125 (FY01-2036)
  • Net profit margin expansion from 12% to 19%
  • Capital expenditures maintained at approximately 1% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $62 $15,648M 80.3%
10-Year Growth $78 $19,467M 66.3%
5-Year EBITDA $60 $15,220M 79.7%
10-Year EBITDA $76 $18,893M 65.3%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.3%
  • Long-term growth rate: 4.0%
  • Fair value: $46.25 (-28.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.4% (Low) to 8.3% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $21 to $61
  • Selected fair value: $40.71 (-37.4% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $738M
Discount Rate (WACC) 10.0% - 7.9%
Enterprise Value $7,385M - $9,341M
Net Debt $1,139M
Equity Value $6,246M - $8,202M
Outstanding Shares 234M
Fair Value $27 - $35
Selected Fair Value $30.88

Key Financial Metrics

Metric Value
Market Capitalization $15222M
Enterprise Value $16361M
Trailing P/E 29.62
Forward P/E 27.19
Trailing EV/EBITDA 15.15
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.09

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $23.50
Discounted Cash Flow (5Y) 25% $15.51
Dividend Discount Model (Multi-Stage) 20% $9.25
Dividend Discount Model (Stable) 15% $6.11
Earnings Power Value 10% $3.09
Weighted Average 100% $57.46

Investment Conclusion

Based on our comprehensive valuation analysis, Trimble Inc's intrinsic value is $57.46, which is approximately 11.7% below the current market price of $65.07.

Key investment considerations:

  • Strong projected earnings growth (12% to 19% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.09)

Given these factors, we believe Trimble Inc is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.