Teradyne (TER) AI Stock Analysis

• Market Cap: $12.36B
• Dividend Yield: 0.62%
• Average Volume (3M): 3.88M
• Price to Earnings (P/E): 23.1
• Beta (1Y): 1.94
• Revenue Growth: 5.52%
• EPS Growth: 16.59%
• Country: US
• Employees: 6,500
• Sector: Technology
• Sector Strength: 63
• Industry: Semiconductors
• EPS (TTM): 3.32
• Shares Outstanding: 160,832,500
• 10 Day Avg. Volume: 3,511,434
• 30 Day Avg. Volume: 3,880,063
• PEG Ratio: 1.39
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 7.87
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $107.47
• Price Target Upside: 44.82% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

Teradyne demonstrates strong financial health with robust profitability, low leverage, and excellent cash flow generation, positioning it well for future growth. However, technical analysis indicates a cautious outlook due to downward momentum and trading below key moving averages. The stock's valuation is fair, but not overly compelling, and the earnings call suggests some uncertainties moving forward. Overall, while there are significant strengths, investors should be mindful of potential risks concerning market visibility and sector-specific challenges.

Positive Factors

Acquisitions

The newly announced acquisition of Quantifi Photonics is seen as positive in strengthening its position in CPO/silicon photonics.

Market Opportunities

Teradyne is well positioned to benefit from strong long-term secular AI compute and memory demand trends.

Technological Advancements

The long-awaited 2nm transition is expected to be a tailwind in 2026, helping to offset ongoing inventory challenges.

Negative Factors

Guidance Revisions

Teradyne's revised 2025 and 2026 guidance is considered too optimistic, with revenue forecasts significantly below company expectations.

Inventory Challenges

Continued pushouts are affecting mobile, auto, and industrial end markets, and the company is no longer affirming its strong growth commentary.

Market Uncertainty

Given tariff uncertainties, the FY25 outlook was not reiterated and there were no updates to Test market TAM size expectations.

Teradyne Business Overview & Revenue Model

Company Description

Teradyne, Inc. designs, develops, manufactures, sells, and supports automatic test equipment worldwide. The company operates through Semiconductor Test, System Test, Industrial Automation, and Wireless Test segments. The Semiconductor Test segment offers products and services for wafer level and device package testing in automotive, industrial, communications, consumer, smartphones, cloud computer and electronic game, and other applications. This segment also provides FLEX test platform systems; J750 test system to address the volume semiconductor devices; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. It serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and semiconductor assembly and test providers. The System Test segment offers defense/aerospace test instrumentation and systems; storage test systems; and circuit-board test and inspection systems. The Industrial Automation segment provides collaborative robotic arms, autonomous mobile robots, and advanced robotic control software for manufacturing, logistics, and light industrial customers. The Wireless Test segment provides test solutions for use in the development and manufacture of wireless devices and modules, smartphones, tablets, notebooks, laptops, peripherals, and Internet-of-Things devices under the LitePoint brand name. This segment also offers IQxel products for Wi-Fi and other standards; IQxstream solution for testing GSM, EDGE, CDMA2000, TD-SCDMA, WCDMA, HSPA+, LTE, and 5G technologies; IQcell, a multi-device cellular signaling test solution; IQgig test solution; and turnkey test software for wireless chipsets. Teradyne, Inc. was incorporated in 1960 and is headquartered in North Reading, Massachusetts.

How the Company Makes Money

Teradyne 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 is in a strong financial position with high profitability, low leverage, and robust cash flow generation. The company effectively manages its resources, as reflected in its margins and growth rates. While revenue fluctuations present some potential risks, the overall financial health remains solid, supporting future growth opportunities in the semiconductor industry.

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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 74.21
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 74.21 is below the 20-day moving average (MA) of 74.35, below the 50-day MA of 89.24, and below the 200-day MA of 115.70, indicating a neutral trend. The MACD of -3.75 indicates Negative momentum. The RSI at 43.38 is Neutral, neither overbought nor oversold. The STOCH value of 80.14 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TER.

Teradyne Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TER	75 Outperform	$12.36B	23.13	21.55%	0.62%	5.52%	16.59%
ASX	74 Outperform	$18.41B	18.66	10.32%	2.62%	-0.62%	-1.08%
SWKS	69 Neutral	$9.54B	19.03	8.34%	4.52%	-12.91%	-42.12%
ON	68 Neutral	$16.90B	11.02	18.97%	―	-14.19%	-27.42%
ALAB	63 Neutral	$10.90B	―	-14.87%	―	242.24%	-221.02%
ENTG	62 Neutral	$12.08B	41.41	8.25%	0.49%	-8.02%	61.14%
Sector *	59 Neutral	$10.71B	10.35	-6.77%	3.02%	7.32%	-11.27%

Teradyne Corporate Events

Teradyne Board Member Ford Tamer Steps Down

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.