Teradyne (TER) Up 5.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Teradyne (TER). Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Teradyne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Teradyne Q4 Earnings & Revenues Beat Estimates
Teradyne reported fourth-quarter 2021 earnings of $1.37 per share, which surpassed the Zacks Consensus Estimate by 6.2% and increased 24.6% year over year.
Revenues of $885.05 million also surpassed the Zacks Consensus Estimate of $867.39 million. Further, the figure increased 16.6% year over year. Higher demand for both Test and Industrial Automation (“IA”) products drove top-line growth for the reported quarter.
Quarter Details
Revenues from Semiconductor Test platforms, System Test business, IA, and Wireless Test business were $592 million, $127 million, $113 million, and $52 million, respectively.
Test revenues were driven by strength in Semiconductor Test and Wireless Test. Also, IA revenues increased because Universal Robots globally delivered high growth.
Operating Results
Non-GAAP gross margin was 59.5%, expanding 20 basis points (bps) year over year.
GAAP operating expenses increased 21.7% year over year to $262.6 million. As a percentage of revenues, GAAP operating expenses increased 125 bps year over year to 29.7%.
Consequently, non-GAAP operating margin was 31%, which expanded 130 bps from the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2021, Teradyne’s cash and cash equivalents (including marketable securities) were $1.37 billion, higher than $1.31 billion on Oct 3, 2021.
Net cash provided by operating activities was $331.3 million for the fourth quarter versus $522.7 million in the prior quarter.
Guidance
For the first quarter of 2022, Teradyne expects revenues between $700 million and $770 million.
Non-GAAP earnings are expected between $0.76 and $0.98 per share for first-quarter 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -29.21% due to these changes.
VGM Scores
Currently, Teradyne has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Teradyne has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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