10Y annualized return is
very good
at 13.5% per year
TER has met or exceeded earnings expectations in
all
recent quarters (10/10)
Moderate P/E Ratio
Strong Price-to-Sales Ratio
Strong Gross Profit Margin
Healthy Net Profit Margin
Low Debt Levels
Strong Liquidity Ratios
🏆 Strong Market Position
💰 Solid Financial Performance
🔗 Strategic Partnerships
🚀 Growth in AI and Compute
🔍 Long-Term Revenue Model
High P/CF Ratio
Declining Interest Coverage
Low Cash Ratio
⚠️ Robotics Underperformance
📉 Market Volatility Risks
🔄 Uncertain Recovery in Robotics
📉 Potential Slowdown in Test Equipment Demand
Overall, Teradyne exhibits strong business quality with a solid market position and positive growth prospects, particularly in AI and Compute segments. However, challenges in Robotics and market volatility present risks to its future performance.
Analysis Date: January 30, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Teradyne, Inc. is a company that creates machines and software to test electronic devices. They help manufacturers check if their products, like smartphones and computers, are working correctly before they are sold. Teradyne also makes robotic arms and mobile robots that assist in factories and warehouses. In simple terms, they ensure that technology products are high-quality and help businesses run smoothly.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$41.73
Current Market Price: $68.02
IV/P Ratio: 0.61x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-63.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for TER
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (20.59)
P/B ratio ≤ 1.5 (3.01)
Current ratio ≥ 2.0 (2.91x)
Long-term debt < Net current assets (0.05x)
Margin of safety (-63.0%)
TER does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
10.70%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
58.37%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
19.25%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
The gross profit margin of 58.37% shows that the company retains a significant portion of revenue after accounting for the cost of goods sold, indicating efficient production and pricing.
With a net profit margin of 19.25%, the company has a strong bottom line, showing good control over its expenses relative to revenue.
The interest coverage ratio is negative at -445.19, which raises concerns about the company's ability to cover interest expenses from earnings.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.02x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
2.91x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
The debt-to-equity ratio is very low at 0.02, indicating that the company has minimal debt relative to its equity, which enhances financial stability.
The current ratio of 2.91 and quick ratio of 2.43 show that the company has a strong ability to meet its short-term liabilities.
The cash ratio of 0.89 suggests that while liquidity is good, the company might not have sufficient cash to cover all current liabilities immediately.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Teradyne has successfully pivoted its focus from a high customer concentration in the Mobile sector to a more diversified customer base, with significant growth in AI-driven Semiconductor Test. They achieved approximately 50% market share in the Compute VIP sector, indicating strong competitive positioning.
In 2024, Teradyne grew total revenue by 5%, excluding divestitures, with a notable 10% increase in earnings per share (EPS) and generated over $470 million in free cash flow. This financial health reflects operational efficiency and sustainable growth potential.
The acquisition of Infineon's tester development team is a strategic move to enhance capabilities in the power semiconductor market, which is expected to grow significantly with the rise of electric vehicles and renewable energy applications.
The Robotics segment experienced challenges with weak industrial automation demand, resulting in lower than expected revenue and profitability. This underperformance indicates potential weaknesses in the execution of their strategy in this area.
Teradyne faces potential risks from market volatility in the Semiconductor Test market, particularly in memory and industrial automation. This could impact future revenue growth and profitability if demand does not recover as expected.
The demand for AI Compute is expected to drive significant growth in SOC and memory test markets. Teradyne anticipates a strong TAM growth of approximately 7% year-over-year, bolstered by the increasing complexity of AI applications and system-level testing.
Teradyne’s updated midterm earnings model anticipates revenue growth from $2.8 billion in 2024 to between $4.5 billion to $5.5 billion by 2028, indicating strong growth potential driven by AI, automotive, and mobile sectors.
The restructuring of the Robotics segment reflects ongoing challenges, and while there are initiatives for improvement, the timeline for significant recovery remains uncertain amid broader market conditions.
The anticipated slowdown in the memory test equipment market due to customers absorbing capacity could limit growth opportunities, creating a more cautious outlook for the overall Semiconductor Test market.
