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Teradyne (TER)
:TER
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Teradyne
(NASDAQ:TER)70Outperform
Positive Factors
Market Positioning
The company's strong positioning in the HBM market and potential market share gains provide further upside potential.
Stock Valuation
Shares are trading at a relatively low multiple compared to historical averages, suggesting significant room for appreciation.
Negative Factors
End-Market Exposure
Analyst does not believe Teradyne will reverse market share trends in 2025 due to unfavorable end-market exposure.
Growth Expectations
The company's assumptions for Robotics growth are considered too aggressive, following a large miss to expectations and plans for restructuring.
Market Share Decline
Teradyne's test market share is estimated to have declined to 37% in 2024.
Teradyne (TER) vs. S&P 500 (SPY)
Market Cap
$17.34B
Dividend Yield0.45%
Average Volume (3M)2.87M
Price to Earnings (P/E)32.3
Beta (1Y)1.80
Revenue Growth5.52%
EPS Growth16.59%
CountryUS
Employees6,500
SectorTechnology
Sector Strength48
IndustrySemiconductors and Equipment
Share Statistics
EPS (TTM)3.32
Shares Outstanding161,718,770
10 Day Avg. Volume2,729,523
30 Day Avg. Volume2,869,580
Financial Highlights & Ratios
PEG Ratio1.95
Price to Book (P/B)N/A
Price to Sales (P/S)6.07
Price to Cash Flow (P/CF)15.10
P/FCF Ratio15.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$139.14Price Target Upside29.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
Teradyne Business Overview & Revenue Model
Company DescriptionTeradyne, Inc. is a leading supplier of automation equipment for test and industrial applications. The company's core products include semiconductor test systems, used for testing microchips, and industrial automation solutions, which include collaborative robots and autonomous mobile robots. Teradyne serves a diverse range of industries, including electronics, automotive, communications, and industrial manufacturing, providing solutions that enhance productivity and product quality.
How the Company Makes MoneyTeradyne generates revenue primarily through the sale of its semiconductor test systems and industrial automation products. The semiconductor test systems are critical for ensuring the functionality and performance of microchips, and are used by semiconductor manufacturers globally. In addition to product sales, Teradyne also offers services such as maintenance, repair, and consulting, which provide recurring revenue streams. Key partnerships with major semiconductor and electronics manufacturers further drive sales and contribute to its earnings. The company's focus on innovation and expanding automation capabilities helps it maintain a competitive edge and capture market share in the growing industrial automation sector.
Teradyne Financial Statement Overview
Summary
Teradyne demonstrates a robust financial position with high profitability, low leverage, and strong cash flow generation. Notably, there is significant revenue growth potential, indicated by high gross and net profit margins. The company's effective cost management and operational efficiency are reflected in strong EBIT and EBITDA margins. However, revenue fluctuations from previous years pose a potential risk.Income Statement
Teradyne shows strong profitability with a high gross profit margin of 59.39% and a net profit margin of 19.42% for TTM. The company has experienced revenue growth from 2023 to 2024 TTM, indicating positive business trends. EBIT and EBITDA margins are robust, demonstrating effective cost management and operational efficiency. However, the revenue decrease from 2022 to 2023 could be a concern if the trend continues.85
Very Positive
Balance Sheet
The balance sheet is solid, with a low debt-to-equity ratio of 0.02, indicating minimal leverage risk. A high equity ratio of 100% reflects strong equity financing. Return on equity is impressive at 3.95%, showcasing effective use of equity to generate profits. Teradyne's liquidity position is strong with substantial cash reserves, reducing financial risk.88
Very Positive
Cash Flow
Cash flow statements indicate excellent cash generation with a substantial free cash flow. Free cash flow to net income ratio is favorable, and the operating cash flow to net income ratio suggests healthy cash conversion efficiency. The significant growth in free cash flow from 2022 to 2023 highlights strong cash management and operational flexibility.90
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.82B | 2.68B | 3.16B | 3.70B | 3.12B | Gross Profit |
| 1.65B | 1.54B | 1.87B | 2.21B | 1.79B | EBIT |
| 593.79M | 501.07M | 831.94M | 1.21B | 928.41M | EBITDA |
| 593.79M | 640.50M | 954.20M | 1.29B | 1.04B | Net Income Common Stockholders |
| 542.37M | 448.75M | 715.50M | 1.01B | 784.15M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 599.67M | 819.73M | 894.38M | 1.37B | 1.44B | Total Assets |
| 3.71B | 3.49B | 3.50B | 3.81B | 3.65B | Total Debt |
| 76.62M | 82.61M | 132.88M | 184.58M | 472.76M | Net Debt |
| -476.73M | -674.96M | -721.89M | -937.62M | -441.36M | Total Liabilities |
| 889.42M | 960.93M | 1.05B | 1.24B | 1.45B | Stockholders Equity |
| 3.71B | 2.53B | 2.45B | 2.57B | 2.21B |
| Cash Flow | Free Cash Flow | |||
| 474.08M | 425.59M | 414.67M | 965.89M | 683.96M | Operating Cash Flow |
| 672.18M | 585.23M | 577.92M | 1.10B | 868.93M | Investing Cash Flow |
| -622.34M | -179.65M | 43.75M | 120.36M | -569.79M | Financing Cash Flow |
| -251.77M | -501.91M | -892.99M | -1.01B | -158.29M |
Teradyne Technical Analysis
Negative
107.23
Price Trends
122.28
Negative
118.82
Negative
127.79
Negative
Market Momentum
-3.47
Positive
37.40
Neutral
15.65
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TER, the sentiment is Negative. The current price of 107.23 is below the 20-day moving average (MA) of 112.59, below the 50-day MA of 122.28, and below the 200-day MA of 127.79, indicating a bearish trend. The MACD of -3.47 indicates Positive momentum. The RSI at 37.40 is Neutral, neither overbought nor oversold. The STOCH value of 15.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TER.
Teradyne Risk Analysis
Teradyne disclosed 36 risk factors in its most recent earnings report. Teradyne reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Teradyne Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $98.12B | 23.23 | 48.75% | 1.13% | 13.21% | 27.25% | |
77 Outperform | $271.75B | 34.01 | 40.98% | 0.82% | 2.53% | -3.33% | |
77 Outperform | $44.93B | 24.04 | 15.46% | 1.73% | -1.09% | -40.55% | |
76 Outperform | $124.20B | 20.00 | 34.06% | 1.05% | 4.45% | -10.01% | |
70 Outperform | $17.34B | 32.29 | 14.62% | 0.45% | 5.52% | 16.59% | |
69 Neutral | $92.89B | 29.40 | 89.51% | 0.91% | 12.19% | 20.80% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
TER
Teradyne
107.23
3.88
3.75%
AMAT
Applied Materials
152.87
-52.79
-25.67%
ASML
ASML Holding
708.22
-253.74
-26.38%
KLAC
KLA
699.00
-0.62
-0.09%
LRCX
Lam Research
76.44
-18.90
-19.82%
TEL
TE Connectivity
148.04
10.18
7.38%
Teradyne Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -12.05% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong growth in the Semiconductor Test segment, particularly driven by AI and Compute, and strategic partnerships that position the company for future growth. However, the Robotics business faced significant challenges due to a weak industrial automation market, affecting overall performance. The balance of these factors leads to a neutral sentiment.Highlights
Semiconductor Test Revenue Growth
SOC and memory test revenue grew 17% year-over-year in 2024, driven by AI accelerator ASICs, networking, HBM, and DRAM.
Record Free Cash Flow
Teradyne generated over $470 million in free cash flow in 2024, contributing to a 10% year-over-year increase in earnings per share.
Strong Performance in Compute Segment
The Compute end market became a larger revenue component than Mobile, with SOC business in Compute growing more than 3.5 times from the prior year.
Strategic Partnership with Infineon
Teradyne announced a partnership with Infineon to accelerate its roadmap in the power semiconductor space, particularly in silicon carbide and gallium nitride.
WiFi 7 Design Wins
Secured 74 out of 80 tracked WiFi 7 design win opportunities in 2024, setting the stage for growth in the Wireless Test business.
Lowlights
Weak Industrial Automation Market
The industrial automation market continued to be weak, impacting the Robotics business, which ended 2024 down slightly for UR and roughly flat for MiR.
Challenges in Robotics Business
Robotics revenue in 2024 was $365 million, with a 13% non-GAAP operating loss in both Q4 and the full year, driven by muted seasonality and weak industrial spending.
Memory Market Softening
While the HBM device end market remained strong, the test equipment market is expected to soften in 2025 as customers absorb capacity with higher productivity tools.
Company Guidance
During the call, Teradyne provided guidance for the first quarter of 2025 and shared insights into their performance and expectations. The company reported fourth-quarter 2024 revenue of $753 million and non-GAAP EPS of $0.95, both at the high end of their guidance range. For 2025, Teradyne anticipates modest growth in its robotics business and expects the Semiconductor SOC Test Total Addressable Market (TAM) to grow by approximately 7% year-over-year. The company projects a 15% revenue growth for the year, driven by continued strength in AI Compute and a recovery in Mobile, Automotive, and Industrial markets in the second half. For the longer term through 2028, Teradyne expects to grow revenue from $2.8 billion to $5 billion, with earnings per share increasing from $3.22 to $8.25, implying a 12% to 18% revenue CAGR and a 21% to 31% EPS CAGR.Teradyne Corporate Events
Executive/Board Changes
Teradyne Board Member Ford Tamer Steps Down
Neutral
Jan 8, 2025
Ford Tamer, a member of Teradyne’s Board of Directors, has decided not to stand for re-election at the upcoming annual meeting, due to his new role as CEO of Lattice Semiconductor Corporation. This decision is not due to any disagreements with Teradyne’s Board or management, and Tamer will continue to serve until his term ends in May 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.