How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Teradyne (TER) ten years ago? It may not have been easy to hold on to TER for all that time, but if you did, how much would your investment be worth today?
Teradyne's Business In-Depth
With that in mind, let's take a look at Teradyne's main business drivers.
Headquartered in North Reading, MA, Teradyne Inc. is a leading provider of automated test equipment. The company is primarily focused on the semiconductor test market, which generates the bulk of its revenues. It also provides specialized system testing equipment for specific end markets.
The semiconductor test product line primarily consists of the FLEX platform (including the IG-XL software operating system enabling single or simultaneous testing of semiconductor devices), the J750 testing system based on the IG-XL software (for very high-volume testing, as required for microprocessors) the Magnum test platform (enabling testing of memory devices produced in very large quantities) and the ETS platform (focused on analog/mixed signal discrete devices that usually have a lower pin count for testing through the proprietary SmartPin technology). Additionally, the company also offers a broad range of services across the world that helps in the deployment and functioning of its testing systems.
Customers primarily consist of semiconductor manufacturers, including integrated device manufacturers (IDMs) or foundries, as well as outsourced assembly and test subcontractors (OSATs).
The company reports revenues mainly under four segments. These segments are Semiconductor Test, System Test, Industrial Automation, and Wireless Test business. In 2021, the company generated $3.70 billion revenues, out of which, Semiconductor Test, System Test, Industrial Automation, and Wireless Test business contributed 71.4%, 12.6%, 10.2% and 5.8%, respectively.
The company has leveraged its expertise in semiconductor testing systems to expand into system testing for military/aerospace instrumentation, hard disk drive (including in-circuit test and x-ray inspection), printed circuit boards and automotive system diagnosis.
Given the comprehensive product portfolio, Teradyne has a large number of competitors like National Instruments, Advantest, Keysight Technologies, Agilent, Advanced Energy and FormFactor, to name a few.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Teradyne, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in November 2012 would be worth $5,812.30, or a 481.23% gain, as of November 28, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 185.71% and gold's return of -2% over the same time frame.
Going forward, analysts are expecting more upside for TER.
Teradyne is benefiting from rising demand for memory test products and growth of OEM channel at Universal Robots. Growth in MiR service and spares business on expansion in customer support offering remains a positive. The company’s strong momentum in the Americas region remains another tailwind. Continuous strength in analog industrial and increasing semiconductor content for EVs, autonomous driving, infotainment and autos are contributing well to top-line growth. However, slowing system-on-a-chip and wireless test demand due to declining end-market shipments of smartphones, compute products and associated infrastructure remains a major headwind. Mounting expenses continue to remain a concern too. Our estimate suggests that total operating expenses are likely to rise 4.1% in 2022 from the year-ago reported figure.
The stock has jumped 11.09% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 10 higher, for fiscal 2022; the consensus estimate has moved up as well.
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