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Trimble Prices $900M Senior Notes, Gets Moody's Baa3 Rating

Zacks Equity Research logoZacks Equity Research 6/11/2018 Zacks Equity Research

Trimble Inc. TRMB recently announced an offering of senior notes aggregating $900 million. These notes have been issued in two tranches of different amounts with varying coupon rates and maturities.

The first tranche of $300 million carries an interest rate of 4.150% and is due 2023 while the second tranche of $600 million, which has an interest rate of 4.900%, is likely to mature in 2028. The sale of the notes is expected to close on or about Jun 15, 2018, subject to closing conditions.

The company stated that transaction proceeds of approximately $890.7 million will be used for general corporate purposes along with financing the previously announced acquisition of Viewpoint.

Since the release of first-quarter fiscal 2018 results on May 7, Trimble’s shares have lost roughly 4%. Also, the stock has underperformed the industry it belongs to on a year-to-date basis. The company’s shares have lost 15.06% against the industry’s growth of 1%.

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Trimble’s Cash Position

At the end of fiscal first-quarter 2018, cash and short-term investments totaled $274.5 million, down from $358.5 billion at the end of the prior quarter. Long-term debt was approximately $691.8 million, down from $785.5 million at the end of the previous quarter. Net cash provided by operations was $82.9 million in the last reported quarter.

We believe that the company has a strong balance sheet, which will help it to capitalize on investment opportunities and pursue strategic acquisitions, further improving its growth prospects. The senior notes’ offering will bring down the company’s cost of capital, in our view, thus strengthening its balance sheet and supporting growth.

Moody's Rating

Trimble’s senior notes were assigned a Baa3 rating by a leading credit rating agency Moody's, along with a stable outlook.

The rating has been assigned based on investors’ optimism on Trimble’s leading position in the GPS market, specializing in positioning, surveying and machine control. The rating agency expects strong demand for Trimble's products and services in the engineering, construction and agricultural sectors. Moody’s also assigned a stable outlook on the rating.

Trimble Inc. Price and Consensus

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Trimble Inc. Price and Consensus | Trimble Inc. Quote

Zacks Rank & Stocks to Consider

Currently, Trimble carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Groupon GRPN, PetMed Express PETS and Expedia EXPE. While Groupon sports a Zacks Rank #1 (Strong Buy), PetMed and Expedia carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Groupon, PetMed and Expedia is currently projected to be 6.5%, 10% and 14.5%, respectively.

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