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Teledyne (TDY) Hits 52-Week High, Can the Run Continue?

Zacks Equity Research

Have you been paying attention to shares of Teledyne Technologies (TDY)? Shares have been on the move with the stock up 12.8% over the past month. The stock hit a new 52-week high of $306.47 in the previous session. Teledyne Technologies has gained 44.7% since the start of the year compared to the 27.2% move for the Zacks Aerospace sector and the 34.7% return for the Zacks Aerospace - Defense Equipment industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 24, 2019, Teledyne reported EPS of $2.8 versus consensus estimate of $2.4.

For the current fiscal year, Teledyne is expected to post earnings of $9.58 per share on $3.1 billion in revenues. This represents a 7.88% change in EPS on a 6.69% change in revenues. For the next fiscal year, the company is expected to earn $10.52 per share on $3.23 billion in revenues. This represents a year-over-year change of 9.86% and 4.17%, respectively.

Valuation Metrics

Teledyne may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Teledyne has a Value Score of D. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 31.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 24.5X versus its peer group's average of 14.6X. Additionally, the stock has a PEG ratio of 4.17. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Teledyne currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Teledyne meets the list of requirements. Thus, it seems as though Teledyne shares could have potential in the weeks and months to come.

How Does Teledyne Stack Up to the Competition?

Shares of Teledyne have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Teledyne Technologies (TDY), Wesco Aircraft Holdings (WAIR), and Lockheed Martin (LMT), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Teledyne. Still, the fundamentals for Teledyne are promising, and it still has potential despite being at a 52-week high.


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Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
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