This Industrial Stock Could Be Worth $25 Billion

Core Viewpoint - Trimble is undervalued by as much as 30% due to its legacy hardware business, despite software, services, and recurring revenue accounting for almost 80% of its revenue [1] Group 1: Valuation and Market Position - Trimble should trade at a premium to its peers, reflecting margin expansion and increased free cash flow opportunities from the shift to recurring revenue [2] - The company is transitioning its revenue streams into higher-margin software and recurring subscriptions, as well as services, yet trades at a discount to its peers [9] Group 2: Growth Opportunities - Trimble's future lies in connecting the physical and digital worlds, creating a common data environment for real-time collaboration among project designers and managers [4] - The opportunity to prevent waste and ensure timely delivery of construction projects using Trimble's technology is significant, potentially saving vast sums of money [5] - The integration of artificial intelligence into Trimble's solutions will enhance software benefits, streamline workflows, and provide actionable insights [6] Group 3: Financial Metrics - The key metric to follow is Trimble's annualized recurring revenue (ARR), expected to grow at a low double-digit to mid-teens annual rate through 2027 [10] - The increase in ARR is projected to lead to higher profit margins and cash flow generation, with free cash flow expected to grow from approximately $750 million in 2025 to $1 billion in 2027, representing a 15% annual growth rate [10]