Geospatial technology company, Trimble, experienced a decline in shares after announcing its fourth-quarter results. While the past quarter performed well, it was the company’s guidance for 2024 that caused concern.
Strong Q4 Performance
Trimble reported fourth-quarter earnings per share (EPS) of 63 cents, with sales totaling $932 million. This exceeded Wall Street expectations of 60 cents EPS and $910 million in sales, according to FactSet.
Despite this positive performance, the company’s shares dropped by almost 9% to $48 each in premarket trading. At the same time, S&P 500 and Nasdaq Composite futures remained relatively unchanged.
Concerns Over 2024 Guidance
The primary cause for the decline in shares stemmed from Trimble’s guidance for 2024. The company projects EPS of approximately $2.70 from sales of about $3.6 billion for the year. Analysts were expecting slightly higher figures of $2.71 EPS and $3.8 billion in sales.
For the first quarter of 2024, Trimble anticipates EPS of around 60 cents from $920 million in sales. Analysts’ projections stand at 67 cents EPS and $980 million in sales.
CEO’s Perspective
CEO Rob Painter expressed satisfaction with the company’s achievements in 2023, highlighting record levels of annual recurring revenue, gross margin, and adjusted Ebitda (earnings before interest, taxes, depreciation, and amortization). He also expressed determination to continue executing their strategy, returning capital to shareholders, and navigating macroeconomic uncertainties in 2024.
Investor Concerns
The uncertainties surrounding the macroeconomic landscape have left investors anxious. Management will be hosting a conference call to discuss the results and provide further insights into how 2024 is shaping up.
As of Monday’s trading, Trimble stock had dropped approximately 6% over the past 12 months, significantly underperforming the S&P 500 by 28 percentage points.
Valuation and Outlook
Shares of Trimble, based on early Monday prices, trade at around 18 times estimated 2024 earnings. In comparison, the S&P 500 trades at a higher multiple of closer to 20 times.
