Trimble is the largest holding in the Ark Space Exploration & Innovation ETF and the fourth-largest in the Ark Autonomous Technology & Robotics ETF, suggesting that Ark Investment Management CEO Cathie Wood is keen on the company’s positioning and workflow technology. Trimble’s disruptive technology is a compelling reason why it could be a fantastic addition to any diversified portfolio.
A New Path with Disruptive Technology
Trimble is shifting from hardware solutions to embracing data analytics and modeling, making it an integral part of its customers’ daily operations. Solutions like Trimble Construction One (TC1) not only enable project design and management but also offer real-time workflow data analysis.
Trimble’s future profitability lies in expanding its subscription and services revenue, leading to improved margins. The company’s focus on annualized recurring revenue (ARR) and free cash flow (FCF) as pivotal metrics signals a strategic transition towards high-margin activities.
Disruptive Valuation Trend
Trimble’s emphasis on growing its ARR indicates a shift towards sustainable and recurring revenue sources. Its projected ARR and FCF growth show a promising trajectory, especially in comparison to its historical revenue growth. CEO Rob Painter’s commentary on the recent earnings call highlights the potential for significant software sales within the AECO market.
Data source: Trimble presentations. *adjusted by excluding the forthcoming joint venture with AGCO.
Fulfilling Potential: Impressive Free-Cash-Flow Growth
Trimble’s robust free cash flow growth is evident in a substantial 60% increase in 2023. The company’s projected expectations for FCF conversion from non-GAAP net income and its underlying growth indicate a significant upward trend, showcasing its positive financial trajectory. With strong underlying growth and expanding cross-selling activities, Trimble is poised for success, even in challenging markets like transportation and residential construction.
Image source: Getty Images.
An Outstanding Cathie Wood Stock to Embrace
Trimble’s remarkable underlying growth and potential position it as an excellent stock choice for investors. The company’s strategic trajectory and expansion into disruptive technologies set the stage for substantial returns, especially when considering its challenged end markets. Trimble’s evolution makes it an unstoppable force in the investment landscape.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Trimble. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
