Teradyne (TER) Q1 Earnings & Revenues Surpass Estimates

Teradyne Inc. TER reported first-quarter 2020 earnings of $1 per share, surpassing the Zacks Consensus Estimate of 86 cents. The figure also increased 85.2% year over year and 13.6% sequentially.

Moreover, revenues of $704.4 million increased 43% year over year. The figure surpassed the Zacks Consensus Estimate by 5.8% and came within the guided range of $670-$710 million.

Inside the Headlines

Approximately 69% of revenues came from semiconductor testing platforms, 17% from the System Test business, 9% from Industrial Automation and the remaining 5% from the Wireless Test business.

The increase in total revenues was driven by strength in Semiconductor Test and System Test businesses. However, headwinds from COVID-19-related impacts on global manufacturing activity impacted the Industrial Automation segment.

Teradyne’s Industrial Automation segment declined 9% year over year in the first quarter due to manufacturing sector headwinds on a global basis.

Teradyne, Inc. Price, Consensus and EPS Surprise

 

Teradyne, Inc. Price, Consensus and EPS Surprise

Teradyne, Inc. price-consensus-eps-surprise-chart | Teradyne, Inc. Quote

Margins

Pro-forma gross margin was 57.6%, down 60 basis points (bps) from the prior-year quarter. The decrease was due to an unfavorable product mix.

Total operating expenses (selling and administrative & engineering and development) of $196.5 million increased 9.9% year over year. As a percentage of sales, both selling & administrative expenses and engineering & development costs decreased from the year-ago quarter.

Operating margin came in at 29.3%, up 1,050 bps from the year-ago quarter.

Balance Sheet

At the end of the first quarter, Teradyne’s cash and cash equivalents were $593.5 million, lower than $773.9 million in the prior quarter.

During the quarter, the company repurchased $79 million of its common stock and paid $16.7 million as dividends.

Guidance

Management expects second-quarter 2020 revenues in the band of $690-$800 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of 86 cents to $1.16.

The Zacks Consensus Estimate for second-quarter revenues and earnings per share is pegged at $617.9 million and 71 cents, respectively.

Zacks Rank and Key Picks

Currently, Teradyne carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Stamps.com Inc. STMP, Fiverr International Lt. FVRR and Wayfair Inc. W, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Stamps.com, Fiverr International and Wayfair is currently projected at 15%, 11.6% and 23%, respectively.

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