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Teradyne Inc TER

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Stock XNAS Rating as of
$126.46 +2.13 (1.71%)
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Company Report

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Teradyne Earnings: Market Selloff Overblown After Positive Results

William Kerwin

We maintain our $135 fair value estimate for shares of wide-moat Teradyne as we believe our long-term thesis is bearing out following second-quarter results. Most of Teradyne’s end markets remain soft in 2024, including its bellwether smartphone chip testing market, which has been depressed since 2022. We believe many of these markets will turn up in 2025, and continue to model a strong two-year recovery through 2026. Teradyne has seen positive results in 2024 from AI chip investment, particularly from memory and networking customers. This AI demand drove revenue above our expectations in the second quarter. Shares sold off as much as 15% following results, which we attribute to an overreaction to third-quarter guidance implying a modest sequential sales decline. We see shares as fairly valued.

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Price vs Fair Value

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TER is trading within a range we consider fairly valued.
Price
$126.46
Fair Value
$657.00
Uncertainty
High
1-Star Price
$243.49
5-Star Price
$18.00
Economic Moat
Mntr
Capital Allocation
Twrffzxx

Bulls Say, Bears Say

Bulls

We think Teradyne’s depth, breadth, and steep investment in chip testing capabilities form structural competitive advantages that would be extremely difficult to replicate.

Bears

We expect continued head-to-head competition with Advantest to be a headwind to Teradyne’s growth and profitability.

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Trading Information

Previous Close Price
$124.34
Day Range
$123.03–126.59
52-Week Range
$81.08–163.21
Bid/Ask
$124.06 / $129.39
Market Cap
$19.74 Bil
Volume/Avg
2.6 Mil / 2.3 Mil

Key Statistics

Price/Earnings (Normalized)
43.76
Price/Sales
7.62
Dividend Yield (Trailing)
0.36%
Dividend Yield (Forward)
0.38%
Total Yield
1.38%

Company Profile

Teradyne provides testing equipment, including automated test equipment for semiconductors, system testing for hard disk drives, circuit boards, and electronics systems and wireless testing for devices. The firm entered the industrial automation market in 2015, into which it sells collaborative and autonomous robots for factory applications. Teradyne serves numerous end markets and geographies directly and indirectly with its products, but its most significant exposure is to semiconductor testing. Teradyne serves vertically integrated, fabless, and foundry chipmakers with its equipment.
Sector
Technology
Industry
Semiconductor Equipment & Materials
Stock Style Box
Mid Growth
Total Number of Employees
6,500
Website
https://www.teradyne.com

Competitors

Valuation

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Metric
TER
KLAC
AMAT
Price/Earnings (Normalized)
 43.7634.9125.07
Price/Book Value
 7.2331.489.40
Price/Sales
 7.6210.936.54
Price/Cash Flow
 34.7030.5722.05
Price/Earnings
TER
KLAC
AMAT

Financial Strength

Metric
TER
KLAC
AMAT
Quick Ratio
 2.121.361.82
Current Ratio
 3.732.142.80
Interest Coverage
 136.4310.7632.42
Quick Ratio
TER
KLAC
AMAT

Profitability

Metric
TER
KLAC
AMAT
Return on Assets (Normalized)
 13.79%21.67%22.48%
Return on Equity (Normalized)
 18.95%104.66%42.56%
Return on Invested Capital (Normalized)
 17.31%35.79%28.55%
Return on Assets
TER
KLAC
AMAT
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