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Results: Teradyne, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

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Teradyne, Inc. (NASDAQ:TER) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 4.1% to hit US$819m. Teradyne reported statutory earnings per share (EPS) US$1.21, which was a notable 18% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Teradyne

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for Teradyne from 15 analysts is for revenues of US$3.17b in 2021 which, if met, would be an okay 5.0% increase on its sales over the past 12 months. Statutory per share are forecast to be US$4.30, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.94b and earnings per share (EPS) of US$3.72 in 2021. So it seems there's been a definite increase in optimism about Teradyne's future following the latest results, with a nice gain to the earnings per share forecasts in particular.

It will come as no surprise to learn that the analysts have increased their price target for Teradyne 11% to US$99.71on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Teradyne at US$120 per share, while the most bearish prices it at US$70.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Teradyne's revenue growth will slow down substantially, with revenues next year expected to grow 5.0%, compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.7% next year. Factoring in the forecast slowdown in growth, it seems obvious that Teradyne is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Teradyne's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Teradyne going out to 2022, and you can see them free on our platform here..

It is also worth noting that we have found 1 warning sign for Teradyne that you need to take into consideration.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.