Trimble Navigation (TRMB) is an OEM of GPS-based products and control systems. December quarter results beat our earnings estimates. The domestic construction market, on which it is highly dependent, is on an uptrend, while the recovery in commercial is more gradual.
However, farm economies remain extremely strong across the world, and well-planned acquisitions have been doing wonders for the TMS business. We are also encouraged by the compelling product line and position in several underpenetrated markets that have helped the company in a very tough operating environment.
While there could be temporary margin pressures, we think Trimble’s business is turning around. We therefore have an Outperform rating on TRMB shares.
