Teradyne (TER) Surpasses Q4 Earnings & Revenue Estimates

Teradyne Inc. TER reported fourth-quarter 2019 earnings of 88 cents per share, surpassing the Zacks Consensus Estimate by 9 cents. The figure also increased 39.7% year over year.

Moreover, revenues of $654.7 million increased 26% year over year. Also, the figure surpassed the Zacks Consensus Estimate by 6.4% and came ahead of the guided range of $590-$630 million.

Inside the Headlines

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.

The increase in total revenues was driven by higher-than-expected memory and wireless test demand. Continued growth in 5G infrastructure test spending, smartphone complexity growth and share gains in the memory test market aided revenue growth in the quarter.

Also, the Teradyne’s Industrial Automation segment witnessed growth in the fourth quarter, partially offset by manufacturing sector headwinds in the United States and Europe.

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 58.5%, down 110 basis points (bps) from the prior-year quarter. The decrease was due to favorable product mix.

Total operating expenses (selling and administrative & engineering and development) of $203.9 million increased 16.3% 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 26.2%, up 460 bps from the year-ago quarter.

Balance Sheet

At the end of the fourth quarter, Teradyne’s cash and cash equivalents were $773.9 million, higher than $593.9 million in the prior quarter.

During the quarter, the company repurchased $131.2 million of its common stock and paid $15 million as dividends.

Guidance

Management expects first-quarter 2020 revenues in the band of $670-$710 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of 86-96 cents.

The Zacks Consensus Estimate for first-quarter revenues and earnings per share is pegged at $559.2 million and 63 cents, respectively.

Zacks Rank and Other Key Picks

Currently, Teradyne carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include Splunk Inc. SPLK, Itron, Inc. ITRI and Waters Corporation WAT. While Splunk and Itron sport a Zacks Rank #1 (Strong Buy), Waters Corp carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Splunk, Itron and Waters Corp is currently projected at 31.2%, 25% and 9.5%, respectively.

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