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Earnings Estimates Rising for Teradyne (TER): Will It Gain?

Zacks Equity Research

Investors might want to bet on Teradyne (TER), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

The upward trend in estimate revisions for this maker of wireless products, data storage and equipment to test semiconductors reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Teradyne, as there has been strong agreement among the covering analysts in raising estimates.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.68 per share for the current quarter, which represents a year-over-year change of +7.94%.

Over the last 30 days, two estimates have moved higher for Teradyne compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 29.92%.

Current-Year Estimate Revisions

The company is expected to earn $2.75 per share for the full year, which represents a change of +16.03% from the prior-year number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Teradyne. Over the past month, eight estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 9.94%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Teradyne currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Teradyne have attracted decent investments and pushed the stock 6.6% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


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