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Will Teradyne (TER) Disappoint This Earnings Season?

Zacks Equity Research

Teradyne Inc. (TER) is set to report third-quarter 2013 results on Oct 23. Last quarter, it posted a 30.0% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company’s earnings exceeded the Zacks Consensus Estimate driven by lean cost structure and strong execution. Also, revenues of $428.9 million were up 53.0% sequentially attributable to new products. Gross margins expanded sequentially due to higher volumes and favorable mix.

For the third quarter, Teradyneexpects to generate revenues in the range of $425 million–$465 million, up 3.7% sequentially at the mid-point. Non-GAAP earnings are expected to be in the range of 39 cents–49 cents while GAAP earnings are expected within the range of 23 cents to 31 cents per share.

Earnings Whispers?

Our proven model does not conclusively show that Teradyneis likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  The earnings ESP for the stock is 0.00%.

Zacks Rank #4 (Sell): We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Melco Crown Entertainment Limited (MPEL), with Earnings ESP of +6.45% and a Zacks Rank #1 (Strong Buy).

Kemper Corporation (KMPR), with Earnings ESP of +39.54% and a Zacks Rank #1 (Strong Buy).

SY Bancorp Inc. (SYBT), with Earnings ESP of +4.08% and a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on TER
Read the Full Research Report on MPEL
Read the Full Research Report on SYBT
Read the Full Research Report on KMPR

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