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Teradyne (TER) Surpasses Q2 Earnings & Revenue Estimates

Zacks Equity Research

Teradyne Inc. TER reported second-quarter 2019 earnings of 66 cents per share, surpassing the Zacks Consensus Estimate by 4 cents. The figure also increased 11.9% year over year.

Moreover, revenues of $564 million increased 7% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $538 million and came ahead of the guided range of $520-$550 million.

Teradyne’s share price was up more than 16% in the after-hour trading session, following better-than-expected results in the second quarter. Also, the company’s shares have returned 12.1% in the past year compared with its industry’s growth of 5.4%.

Approximately 67% of revenues came from semiconductor testing platforms, 13% from Industrial Automation, 13% from the System Test business and the remaining 7% from the Wireless Test business.

Inside the Headlines

The increase in total revenues was driven by escalating demand for the System Test business. Semiconductor Test revenues were up 4% from the year-ago quarter. Continued growth in 5G infrastructure, networking and memory test spending aided revenue growth in the quarter.

Teradyne’s Industrial Automation segment recorded 20% year-over-year growth in the second quarter. The growth was driven by strength in Universal Robots and the addition of Mobile Industrial Robots.

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 57.4%, down 90 basis points (bps) from the prior-year quarter. The decrease was due to unfavorable product mix.

Total operating expenses (selling and administrative &engineering and development) of $190.2 million increased 8.9% year over year. Both selling & administrative, and engineering & development expenses — as a percentage of sales — increased from the year-ago quarter.

Operating margin came in at 23.8%, up 100 bps from the year-ago quarter.

Balance Sheet

At the end of the second quarter, Teradyne’s cash and cash equivalents were $495.1 million, higher than $483.7 million in the corresponding period of 2019.

During the quarter, the company repurchased $90.8 million of its common stock and paid $15.4 million as dividends.

Guidance

Management expects third-quarter 2019 revenues in the band of $540-$580 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of 64-74 cents.

The Zacks Consensus Estimate for third-quarter revenues and earnings per share is pegged at $547.9 million and 63 cents, respectively.

Zacks Rank and Key Picks

Currently, Teradyne carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include IAC/InterActiveCorp IAC, Expedia Group, Inc. EXPE and eBay Inc. EBAY, 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 IAC/InterActive, Expedia and eBay is currently projected at 20.5%, 13.4% and 9.4%, respectively.

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