Looking at the the stock repurchase program in the context of this being a company focused on growth, their FCF vs. contractual obligations, and their history of acquisitions, is that something you'd like to see continue or do you think that money would be more beneficial to the company long-term spent elsewhere?
I'm typically a fan of buyback news but looking at the big picture, this is one along with my MercadoLibre that I'd prefer them to deploy elsewhere. It's not an excessive buyback or anything given where their revenues are and their debt is financed at fairly low rates-- not enough to strongly sway me but something I'd probably vote against if given the option.
I like to see where their R&D spend is at. This certainly isn't the type of company that should be resting on its laurels, and with their large patent base and diverse list of customers already on the books, this is the best route to increasing their margins and recurring revenue to my eyes. Talking about creating synergies within a company from past acquisitions that haven't quite been integrated is almost an investing cliche at this point ha, but coupled with their R&D spend it's reasonable to expect to see some of that in practice here. If that R&D spend ends up helping margins to expand and adds a new meaningful revenue stream or two, Trimble could end up looking relatively cheap in comparison to its peers.
I agree that the cash should be deployed to more productive uses than buybacks. But, if you look at the buyback history over the last three years, it's definitely slowing. The Company is employing a strategy to divert cash flows to R&D and the reconsolidation of the business in attempt to move to the subscription model and improve recurring revenues. This also gives them better margins. So, I do think they are relatively cheap and we could see improvement in the price.
From what I read of the earnings calls and JPM conference discussions, I don't see them focusing on buybacks. But, I do think the area to focus on will be their acquisition strategy.
Looking at the the stock repurchase program in the context of this being a company focused on growth, their FCF vs. contractual obligations, and their history of acquisitions, is that something you'd like to see continue or do you think that money would be more beneficial to the company long-term spent elsewhere?
I'm typically a fan of buyback news but looking at the big picture, this is one along with my MercadoLibre that I'd prefer them to deploy elsewhere. It's not an excessive buyback or anything given where their revenues are and their debt is financed at fairly low rates-- not enough to strongly sway me but something I'd probably vote against if given the option.
I like to see where their R&D spend is at. This certainly isn't the type of company that should be resting on its laurels, and with their large patent base and diverse list of customers already on the books, this is the best route to increasing their margins and recurring revenue to my eyes. Talking about creating synergies within a company from past acquisitions that haven't quite been integrated is almost an investing cliche at this point ha, but coupled with their R&D spend it's reasonable to expect to see some of that in practice here. If that R&D spend ends up helping margins to expand and adds a new meaningful revenue stream or two, Trimble could end up looking relatively cheap in comparison to its peers.
I agree that the cash should be deployed to more productive uses than buybacks. But, if you look at the buyback history over the last three years, it's definitely slowing. The Company is employing a strategy to divert cash flows to R&D and the reconsolidation of the business in attempt to move to the subscription model and improve recurring revenues. This also gives them better margins. So, I do think they are relatively cheap and we could see improvement in the price.
From what I read of the earnings calls and JPM conference discussions, I don't see them focusing on buybacks. But, I do think the area to focus on will be their acquisition strategy.