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Teradyne (TER) Up 28.8% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Teradyne (TER). Shares have added about 28.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Teradyne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Teradyne Q1 Earnings Top Estimates, Revenues Fall Y/Y

Teradyne reported first-quarter 2024 earnings of 51 cents per share, surpassing the Zacks Consensus Estimate by 54.55% but declining 7.3% year over year.

Revenues of $600 million beat the Zacks Consensus Estimate by 4.9% but declined 2.9% year over year.

Quarter Details

Revenues from Semiconductor Test platforms, System Test business, Wireless Test business and Robotics were $412 million (68.7% of total revenues), $75 million (12.5%), $25 million (4.2%) and $88 million (14.7%), respectively.

Strong momentum in the memory test end-market drove top-line growth. However, continued softness in the mobility sector was a concern.

Gross margin was 56.6%, which contracted 110 basis points (bps) year over year.

In the reported quarter, selling and administrative expenses dropped 1.2% year over year to $149.2 million. As a percentage of revenues, selling and marketing expenses were 24.9%, up 40 bps year over year.

Engineering and development expenses decreased 2.4% year over year to $103.2 million. As a percentage of revenues, engineering and development expenses increased 10 bps on a year-over-year basis to 17.2%.

Balance Sheet & Cash Flow

As of Mar 31, 2024, Teradyne’s cash and cash equivalents (including marketable securities) were $748.7 million, lower than $819.7 million as of Dec 31, 2023.

Net cash provided by operating activities was $7.279 million for the first quarter, down from $248.8 million in the prior quarter.

Guidance

For the second quarter of 2024, Teradyne expects revenues between $665 million and $725 million. Non-GAAP earnings are expected between 64 cents and 84 cents per share.

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How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 15.38% due to these changes.

VGM Scores

At this time, Teradyne has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Teradyne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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Teradyne, Inc. (TER) : Free Stock Analysis Report

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