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Essential Insights for Teradyne (TER) Stock Investors

It's been a great afternoon session for Teradyne investors, who saw their shares rise 2.7% to a price of $144.01 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

Teradyne's Valuation Is in Line With Its Sector Averages:

Teradyne, Inc. designs, develops, manufactures, and sells automated test systems and robotics products worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Teradyne has a trailing 12 month P/E ratio of 54.5 and a P/B ratio of 8.66.

Teradyne's PEG ratio is 5.89, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:

2018 2019 2020 2021 2022 2023
Revenue (M) $2,101 $2,295 $3,121 $3,703 $3,155 $2,676
Gross Margins 57% 57% 56% 60% 59% 56%
Net Margins 22% 20% 25% 27% 23% 17%
Net Income (M) $452 $467 $784 $1,015 $716 $449
Net Interest Expense (M) $22 $22 $24 $18 $4 $4
Depreciation & Amort. (M) $67 $71 $80 $91 $91 $92
Diluted Shares (M) 193 179 183 184 170 164
Earnings Per Share $2.35 $2.6 $4.28 $5.53 $4.22 $2.73
EPS Growth n/a 10.64% 64.62% 29.21% -23.69% -35.31%
Avg. Price $38.6 $49.08 $78.61 $127.94 $113.66 $144.01
P/E Ratio 16.02 17.91 16.65 20.8 25.15 49.49
Free Cash Flow (M) $363 $444 $684 $966 $415 $426
CAPEX (M) $114 $135 $185 $132 $163 $160
Current Ratio 3.64 3.08 3.45 3.2 3.03 3.28

Teradyne has growing revenues and increasing reinvestment in the business and an excellent current ratio of 3.28. Additionally, the company's financial statements display wider gross margins than its peer group and generally positive cash flows. However, the firm has EPS growth achieved by reducing the number of outstanding shares.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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