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Teradyne (TER) Q4 Earnings & Revenues Beat Estimates, Rise Y/Y

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Teradyne, Inc. TER reported fourth-quarter 2020 earnings of $1.10 per share, which surpassed the Zacks Consensus Estimate by 11.1%. The figure increased 25% year over year but decreased 6.8% sequentially.

Revenues of $759 million surpassed the Zacks Consensus Estimate of $720 million. Further, the figure increased 16% year over year but declined 7.4% from the previous quarter.

Coming to the price performance, Teradyne has returned 85.8% over a year, outperforming the industry’s rally of 22.8%.

Revenues in Detail

Notably, $524 million revenues (69% of total revenues) came from Semiconductor Test platforms, $104 million (14%) from the System Test business, $92 million (12%) from Industrial Automation and $40 million (5%) from the Wireless Test business.

Year-over-year growth in total revenues was driven by stronger-than-expected industrial automation shipments during the reported quarter. This led to 4% growth in Industrial Automation revenues on a year-over-year basis.

Further, strong test revenues, which grew 18% year over year, contributed well.

Also, continuous positive contributions from the Universal Robots buyout drove the top line above the guided range.

Operating Details

Pro-forma gross margin was 59.3%, expanding80 basis points (bps) from the prior-year quarter.

Total operating expenses of $215.7 million increased 1.9% year over year. As a percentage of revenues, the figure contracted 390 bps year over year.

Consequently, operating margin was at 29.7%, up 230 bps from the year-ago quarter.

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

Balance Sheet

As of Dec 31, 2020, Teradyne’s cash and cash equivalents (including marketable securities) were $1.44 billion, higher than $1.23 billion as of Sep 27, 2020.

Net cash provided by operating activities was $260.4 million for the fourth quarter versus $342.5 million in the prior quarter.

During the quarter, the company paid out $16.6 million as dividends.


Management expects revenues of $720-$780 million for first-quarter 2021. The Zacks Consensus Estimate for the same is pegged at $739.4 million.

Strengthening test demand, continuous recovery in automotive-related semiconductor test shipments and improving the performance of Universal Robots remain major tailwinds.

Non-GAAP earnings are expected at $0.95-$1.11 per sharefor first-quarter 2021. The consensus mark for the same is projected at $1.01.

Zacks Rank & Other Stocks to Consider

Currently, Teradyne carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Square, Inc. SQ, Alphabet Inc. GOOGL and Garmin Ltd.GRMN. All three companies currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rates of Square, Alphabet and Garmin are pegged at 32.99%, 16.93% and 6.8%, respectively.

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