Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
The latest earnings announcement Teradyne, Inc. (NASDAQ:TER) released in December 2018 signalled that the business benefited from a sizeable tailwind, leading to a high double-digit earnings growth of 75%. Below, I’ve laid out key numbers on how market analysts predict Teradyne’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings falling by a double-digit -24%. Beyond this, earnings will begin to improve, rising year on year, and reaching US$441m by 2022.
While it is helpful to be aware of the growth each year relative to today’s value, it may be more beneficial to determine the rate at which the business is growing every year, on average. The benefit of this method is that we can get a better picture of the direction of Teradyne’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -0.7%. This means that, we can assume Teradyne will chip away at a rate of -0.7% every year for the next couple of years.
For Teradyne, there are three pertinent aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is TER worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TER is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TER? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.