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Teradyne (TER) Down 5.7% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Teradyne (TER). Shares have lost about 5.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Teradyne due for a breakout? 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 drivers.

Teradyne Q1 Earnings & Revenues Beat Estimates

Teradyne reported first-quarter 2022 earnings of 98 cents per share, which surpassed the Zacks Consensus Estimate by 12.6%. Yet, earnings decreased 11.7% year over year and 28.5% sequentially.

Revenues of $755.4 million also surpassed the Zacks Consensus Estimate of $742 million. Yet, the figure declined 3% and 14.7% on a year-over-year and sequential basis, respectively.

The year-over-year decline was a result of weak demand for Test products. Nevertheless, strength of Industrial Automation (“IA”) products aided its performance for the reported quarter.

Quarterly Details

Revenues from Semiconductor Test platforms, System Test business, IA, and Wireless Test business were $482 million, $119 million, $103 million, and $52 million, respectively.

Test revenues were driven by strength in Semiconductor Test and Wireless Test. Also, IA revenues increased on account of an improvement in the performance of Universal Robots globally.

Operating Results

Non-GAAP gross margin was 60.2%, expanding 110 basis points (bps) year over year.

Operating expenses increased 17.7% year over year to $269.1 million. As a percentage of revenues, operating expenses increased 637 bps year over year to 35.6%.

Consequently, non-GAAP operating margin was 27.4%, which contracted 220 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Apr 3, 2022, Teradyne’s cash and cash equivalents (including marketable securities) were $1.08 billion, lower than $1.37 billion on Dec 31, 2021.

Net cash provided by operating activities was $7.46 million for the first quarter versus $331.3 million in the prior quarter.

Guidance

For the second quarter of 2022, Teradyne expects revenues between $780 million and $870 million.

Non-GAAP earnings are expected between $1.00 and $1.29 per share for second-quarter 2022.

 

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 7.65% due to these changes.

VGM Scores

Currently, Teradyne has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 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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