U.S. markets open in 9 hours 9 minutes
  • S&P Futures

    3,362.75
    -20.25 (-0.60%)
     
  • Dow Futures

    27,200.00
    -165.00 (-0.60%)
     
  • Nasdaq Futures

    11,535.25
    -52.75 (-0.46%)
     
  • Russell 2000 Futures

    1,573.70
    -15.30 (-0.96%)
     
  • Crude Oil

    38.68
    -0.89 (-2.25%)
     
  • Gold

    1,909.40
    -2.50 (-0.13%)
     
  • Silver

    24.45
    -0.12 (-0.49%)
     
  • EUR/USD

    1.1781
    -0.0008 (-0.07%)
     
  • 10-Yr Bond

    0.7780
    -0.0230 (-2.87%)
     
  • Vix

    33.35
    +0.89 (+2.74%)
     
  • GBP/USD

    1.3038
    -0.0004 (-0.03%)
     
  • USD/JPY

    104.2700
    -0.2240 (-0.21%)
     
  • BTC-USD

    13,729.70
    +34.40 (+0.25%)
     
  • CMC Crypto 200

    271.48
    +10.19 (+3.90%)
     
  • FTSE 100

    5,728.99
    -63.02 (-1.09%)
     
  • Nikkei 225

    23,417.48
    -68.32 (-0.29%)
     

Teradyne (TER) Q2 Earnings & Revenues Surpass Estimates

Zacks Equity Research
·3 mins read

Teradyne Inc. TER reported second-quarter 2020 earnings of $1.33 per share, surpassing the Zacks Consensus Estimate of $1.04. The figure also increased 101.5% year over year and 33% sequentially.

Moreover, revenues of $838.7 million increased 438.7% year over year. The figure surpassed the Zacks Consensus Estimate by 10.6%.

Following strong second-quarter results and encouraging third-quarter guidance, Teradyne’s share price rose 3.99% in after-hours trading.

Teradyne, Inc. Price, Consensus and EPS Surprise

Teradyne, Inc. Price, Consensus and EPS Surprise
Teradyne, Inc. Price, Consensus and EPS Surprise

Teradyne, Inc. price-consensus-eps-surprise-chart | Teradyne, Inc. Quote

Inside the Headlines

Approximately 79% of revenues came from semiconductor testing platforms, 9% from the System Test business, 7% from Industrial Automation and the remaining 5% from the Wireless Test business.

The increase in total revenues was driven by strong test revenues, which grew 59% year over year on Semiconductor Test strength. Also, stronger-than-expected System on a Chip (SOC) test shipments — driven by increased demand for mobility-related test capacity — aided revenue growth.

However, Teradyne’s Industrial Automation segment declined 21% year over year in the second quarter due to manufacturing sector headwinds on a global basis.

Margins

Pro-forma gross margin was 56.2%, down 130 basis points (bps) from the prior-year quarter. The decrease was due to an unfavorable product mix.

Total operating expenses (selling and administrative & engineering and development) of $207.4 million increased 9% year over year. As a percentage of sales, both selling & administrative expenses and engineering & development costs decreased from the year-ago quarter.

Operating margin came in at 31.5%, up 770 bps from the year-ago quarter.

Balance Sheet

At second quarter-end, Teradyne’s cash and cash equivalents (including marketable securities) were $958.1 million, higher than $804.5 million in the prior quarter.

Net cash provided by operating activities were $225.8 million in the second quarter versus $43.1 million in the prior quarter.

During the quarter, the company repurchased $9.4 million of its common stock and paid $16.6 million as dividends.

Guidance

Management expects third-quarter 2020 revenues in the band of $745-$805 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of $1.01-$1.17.

Management provided encouraging third-quarter guidance to reflect increased memory and storage test shipments, along with production ramps of new product design wins in SOC test.

The Zacks Consensus Estimate for third-quarter revenues and earnings per share is pegged at $606.86 million and 65 cents, respectively.

Zacks Rank and Key Picks

Currently, Teradyne carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the broader technology sector include Microchip Technology Incorporated MCHP, eBay EBAY and Wayfair Inc. W. While Microchip Technology and eBay sport a Zacks Rank #1 (Strong Buy), Wayfair carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Microchip Technology, eBay, and Wayfair is currently projected at 14.5%, 11.71% and 23%, respectively.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
eBay Inc. (EBAY) : Free Stock Analysis Report
 
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
 
Teradyne, Inc. (TER) : Free Stock Analysis Report
 
Wayfair Inc. (W) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.