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Will Teradyne (TER) Miss Earnings Estimates?

Zacks Equity Research

Teradyne Inc. (NYSE:TER) is set to report fourth quarter 2013 results on Jan 22. Last quarter, it posted a 4.55% positive surprise. Let us see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Teradyne’s third-quarter earnings exceeded the Zacks Consensus Estimate on lower-than-expected operating expenses. Though Teradyne’s new products related to mobile phones fared well in the quarter, storage test lines were impacted by weak PC demand.

For the fourth quarter of 2013, Teradyne expects revenues to be in the range of $260 million–$285 million, down 37.1% sequentially at the mid-point. Non-GAAP earnings from continuing operations are expected to be in the range of 0 to 7 cents a share and GAAP earnings are expected to be 4 cents to 8 cents per share.

Earnings Whispers?

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

Zacks ESP: Teradyne’s expected surprise prediction stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 4 cents.

Zacks Rank #3 (Hold): Teradyne’s Zacks Rank #3 when combined with an ESP of 0.00% makes surprise prediction difficult. We caution against stocks with Zacks Rank #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 Ltd. (NASD:MPEL), Earnings ESP of +2.56% and a Zacks #2 Rank (Buy)

Western Digital (NASD:WDC), Earnings ESP of +0.96% and a Zacks Rank #1 (Strong Buy)

Multimedia Games Holding Company, Inc. (NASD:MGAM), Earnings ESP of +10.35% and a Zacks Rank #1

Read the Full Research Report on WDC
Read the Full Research Report on TER
Read the Full Research Report on MPEL
Read the Full Research Report on MGAM

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