Garmin Ltd. (GRMN) & Trimble Navigation Limited (TRMB): In The GPS Space, Business Wins

Better in Business

The benefit of operating in the business space is what separates these two companies and why investors should prefer Trimble Navigation Limited (NASDAQ:TRMB) over the long term. That’s true even though Garmin Ltd. (NASDAQ:GRMN)’s top line is larger, since that fact doesn’t always translate into a better business.

A good example is Facebook Inc (NASDAQ:FB), which serves the retail market, like Garmin. It pulled in $5 billion in revenues in 2012, but only managed to eek out a penny a share in earnings. LinkedIn Corp (NYSE:LNKD), which caters to business customers, posted sales of just under $1 billion in 2012, but earned nearly $0.20 a share.

The big difference between the two companies is that LinkedIn has been able to sell products and services to its business focused customers while Facebook Inc (NASDAQ:FB) still hasn’t managed to tap its massive customer base.

Of the two LinkedIn has a better business and is likely to see continued growth, but investors should stay away until the P/E multiple drops into the low double digits from the over 400 it trades at today. Indeed, LinkedIn Corp (NYSE:LNKD) shares are still trading at unrealistic heights despite having pulled back from the $200 level.

Facebook Inc (NASDAQ:FB), which has a similarly ridiculous P/E because of its tiny earnings, probably has more upside potential for aggressive investors who think it can figure out a way to make more off of its customers.

Buy the Business GPS

If you have been watching Garmin Ltd. (NASDAQ:GRMN) and thinking that it has potential because GPS is such a useful tool, take a look at Trimble Navigation Limited (NASDAQ:TRMB). The business focused company has integrated GPS to such a degree that customers are happy to pay for its products and services. Garmin hasn’t managed that trick nearly as well.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Facebook Inc (NASDAQ:FB) and LinkedIn Corp (NYSE:LNKD). The Motley Fool owns shares of Facebook and LinkedIn.

The article In The GPS Space, Business Wins originally appeared on Fool.com.

Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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