Will Strong Sales Volume Aid Teledyne's (TDY) Q4 Earnings?

Teledyne Technologies Incorporated TDY is scheduled to report its fourth-quarter 2021 results on Jan 27, 2022 before the market opens.

Teledyne has a four-quarter earnings surprise of 23.15%, on average. Strong operational performance from the majority of the company’s segments is expected to have contributed favorably to its overall fourth-quarter performance.

Digital Imaging – a Key Revenue Contributor

The FLIR Teledyne business has been a strong top-line contributor to Teledyne’s Digital Imaging segment’s revenues since its acquisition. Alike its robust performance in the past quarters, it is expected to have continued to favorably impact its Digital Imaging segment’s performance, thus boosting the segment’s revenues in the soon-to-be-reported quarter. Also, the cost synergy from its acquisition is expected to have added impetus to this segment’s bottom line in the fourth quarter.

The Zacks Consensus Estimate for the Digital Imaging segment’s revenues in the fourth quarter is pegged at $793 million, indicating a whopping improvement of 202.7% from revenues reported in the year-ago quarter.

Strong Sales to Boost Instrumentation Revenues

The Instrumentation segment is likely to have retained its growth momentum in sales alike the past couple of quarters. Solid sales of test and electronic test and measurement systems like oscilloscopes and protocol analyzers along with strong sales of environmental instruments related to the human health and safety markets, such as drug discovery and gas and flame detection, are likely to have boosted the top line of this segment.

The Zacks Consensus Estimate for the Instrumentation segment’s revenues in the fourth quarter is pegged at $303 million, indicating an improvement of 7.1% from revenues reported in the year-ago quarter.

Strong Sales Volume From Aerospace and Defense Electronics

Due to the recovery observed in the commercial aerospace market, the strong sales volume of its commercial aerospace products is expected to have boosted the Aerospace and Defense Electronics segment’s fourth-quarter revenues. Also, solid defense, space and industrial-related product sales are expected to have added impetus to this segment’s revenues in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for Aerospace and Defense Electronics’ revenues in the fourth quarter is pegged at $160 million, indicating growth of 10.3% from revenues reported in the year-ago quarter.

Engineered Systems’Performance Remains Gloomy

Revenues from the Engineered Systems business unit may have been negatively impacted by the elimination of the turbine engine business, which the company exited in 2021. This might have weighed down on this unit’s revenues in the soon-to-be-reported quarter. The Zacks Consensus Estimate for Engineered Systems’ revenues in the fourth quarter is pegged at $105 million, indicating a decline of 11.8% from revenues reported in the year-ago quarter.

Teledyne Technologies Incorporated Price and EPS Surprise

Teledyne Technologies Incorporated Price and EPS Surprise

Teledyne Technologies Incorporated price-eps-surprise | Teledyne Technologies Incorporated Quote

Other Factors to Consider

Such growth expectations from the majority of its segments make TDY optimistic about its overall revenue performance in the fourth quarter.

From the cost perspective, Teledyne Technologies has eliminated certain corporate overhead consultants and other fourth-party service providers, which will result in an annualized cost savings of $80 million by 2022. This, along with strong operational performance, is likely to have favorably contributed to the bottom line of the company.

However, inflationary and supply-chain constraint trends might have had a partial impact on its soon-to-be-reported quarterly results.

Fourth-Quarter Estimates

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.36 billion, suggesting growth of 67.5% from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for fourth-quarter earningsis pegged at $4.24 per share, indicating a 32.5% surge from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Teledyne Technologies this time. The combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.

Teledyne Technologies has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks to Consider

Here are three defense players you may want to consider as they have the right combination of elements to post an earnings beat this season:

Aerojet Rocketdyne Holdings AJRD has an Earnings ESP of +2.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet has a four-quarter average negative earnings surprise of 2.17%. The Zacks Consensus Estimate for AJRD’s fourth-quarter sales and earnings is pegged at $578.5 million and 50 cents per share, respectively.

Textron TXT has an Earnings ESP of +1.02% and a Zacks Rank #3. Textron delivered a four-quarter average earnings surprise of 27.89%.

The long-term earnings growth rate of TXT is pegged at 28.3%. The Zacks Consensus Estimate for Textron’s fourth-quarter sales and earnings is pegged at $3.4 billion and 98 cents per share, respectively.

Triumph Group TGI has an Earnings ESP of +1.01% and a Zacks Rank #3. Triumph Group delivered a four-quarter average earnings surprise of 101.89%.

The Zacks Consensus Estimate for TGI’s fourth-quarter sales and earnings is pegged at $368.8 million and 20 cents per share, respectively.

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