Why Is Teledyne (TDY) Up 7.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Teledyne Technologies (TDY). Shares have added about 7.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Teledyne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Teledyne Q2 Earnings Beat Estimates, Sales Rise Y/Y
Teledyne Technologiesreported second-quarter 2023 adjusted earnings of $4.67 per share, which beat the Zacks Consensus Estimate of $4.63 by 0.9%. The bottom line improved 5.4% from $4.43 recorded in the year-ago quarter.
The company recorded GAAP earnings of $3.87 per share, up 7.8% from the prior-year period’s $3.59.
Operational Highlights
Total sales amounted to $1,424.7 million, which beat the Zacks Consensus Estimate of $1,416.7 million by 0.6%. The top line improved 5.1% from $1,355.8 million reported in the year-ago quarter. This improvement can be attributed to higher year-over-year sales recorded across all of its four segments in the second quarter.
Segmental Performance
Instrumentation: Sales in this segment improved 5.1% year over year to $328.4 million, driven by higher sales across the marine instrumentation and test and measurement instrumentation product lines.
Adjusted operating income increased 8.4% year over year to $84.9 million, driven by higher sales and favorable product mix.
Digital Imaging: Quarterly sales in this division improved 2.3% year over year to $793.3 million. The increase was driven by incremental sales from recent acquisitions as well as greater sales of x-ray products, commercial infrared imaging components and solutions, and industrial and scientific cameras.
Adjusted operating income rose 3.6% year over year to $170.2 million. This was due to increased net sales and lower acquired intangible amortization expenses in the second quarter.
Aerospace and Defense Electronics: Sales in this segment totaled $186 million, up 10.2% from that recorded in the prior-year quarter. The improvement was driven by higher sales of aerospace electronics and defense electronics.
Adjusted operating income also increased 20.5% year over year to $53.4 million due to higher sales and improved product margins across most defense electronics product categories.
Engineered Systems: Revenues in this division improved 18.5% year over year to $117 million. This increase was mainly due to higher sales of energy systems and engineered products.
Adjusted operating income rose 33.7% to $11.5 million due to higher sales.
Financial Condition
Teledyne’s cash and cash equivalents totaled $364.2 million as of Jul 2, 2023, compared with $638.1 million as of Jan 1, 2023. Total long-term debt was $2,903.2 million compared with $3,620.5 million as of Jan 1, 2023.
Cashflow from operating activities totaled $190.5 million at the end of the second quarter compared with $196.9 million in the year-ago period. Capital expenditure amounted to $27.3 million, up from $20.8 million in the prior-year quarter.
TDY generated free cash flow of $163.2 million, indicating a 7.3% year-over-year increase.
Guidance
Teledyne expects adjusted earnings of $4.70-$4.80 per share in the third quarter of 2023. The bottom-line estimate is pegged at $4.76, higher than the mid-point of the company's guided range.
For 2023, the company still expects adjusted earnings of $19.00-$19.20 per share. The Zacks Consensus Estimate for earnings is pegged at $19.12 per share, higher than the mid-point of the company’s guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Teledyne has an average Growth Score of C, 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 C. 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. Notably, Teledyne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Teledyne is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Hexcel (HXL), a stock from the same industry, has gained 1.1%. The company reported its results for the quarter ended June 2023 more than a month ago.
Hexcel reported revenues of $454.3 million in the last reported quarter, representing a year-over-year change of +15.6%. EPS of $0.50 for the same period compares with $0.33 a year ago.
Hexcel is expected to post earnings of $0.42 per share for the current quarter, representing a year-over-year change of +27.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Hexcel. Also, the stock has a VGM Score of C.
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Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report
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