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Why Is Teradyne (TER) Up 0.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Teradyne (TER - Free Report) . Shares have added about 0.8% in that time frame, underperforming 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 catalysts.
Teradyne Q2 Earnings & Revenues Surpass Estimates
Teradyne Inc. reported second-quarter 2020 earnings of $1.33 per share, surpassing the Zacks Consensus Estimate of $1.04. The figure also increased 101.5% year over year and 33% sequentially.
Moreover, revenues of $838.7 million increased 438.7% year over year. The figure surpassed the Zacks Consensus Estimate by 10.6%.
Inside the Headlines
Approximately 79% of revenues came from semiconductor testing platforms, 9% from the System Test business, 7% from Industrial Automation and the remaining 5% from the Wireless Test business.
The increase in total revenues was driven by strong test revenues, which grew 59% year over year on Semiconductor Test strength. Also, stronger-than-expected System on a Chip (SOC) test shipments — driven by increased demand for mobility-related test capacity — aided revenue growth.
However, Teradyne’s Industrial Automation segment declined 21% year over year in the second quarter due to manufacturing sector headwinds on a global basis.
Margins
Pro-forma gross margin was 56.2%, down 130 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 $207.4 million increased 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 31.5%, up 770 bps from the year-ago quarter.
Balance Sheet
At second quarter-end, Teradyne’s cash and cash equivalents (including marketable securities) were $958.1 million, higher than $804.5 million in the prior quarter.
Net cash provided by operating activities were $225.8 million in the second quarter versus $43.1 million in the prior quarter.
During the quarter, the company repurchased $9.4 million of its common stock and paid $16.6 million as dividends.
Guidance
Management expects third-quarter 2020 revenues in the band of $745-$805 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of $1.01-$1.17.
Management provided encouraging third-quarter guidance to reflect increased memory and storage test shipments, along with production ramps of new product design wins in SOC test.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 70.63% due to these changes.
VGM Scores
At this time, Teradyne has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Teradyne has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Teradyne (TER) Up 0.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Teradyne (TER - Free Report) . Shares have added about 0.8% in that time frame, underperforming 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 catalysts.
Teradyne Q2 Earnings & Revenues Surpass Estimates
Teradyne Inc. reported second-quarter 2020 earnings of $1.33 per share, surpassing the Zacks Consensus Estimate of $1.04. The figure also increased 101.5% year over year and 33% sequentially.
Moreover, revenues of $838.7 million increased 438.7% year over year. The figure surpassed the Zacks Consensus Estimate by 10.6%.
Inside the Headlines
Approximately 79% of revenues came from semiconductor testing platforms, 9% from the System Test business, 7% from Industrial Automation and the remaining 5% from the Wireless Test business.
The increase in total revenues was driven by strong test revenues, which grew 59% year over year on Semiconductor Test strength. Also, stronger-than-expected System on a Chip (SOC) test shipments — driven by increased demand for mobility-related test capacity — aided revenue growth.
However, Teradyne’s Industrial Automation segment declined 21% year over year in the second quarter due to manufacturing sector headwinds on a global basis.
Margins
Pro-forma gross margin was 56.2%, down 130 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 $207.4 million increased 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 31.5%, up 770 bps from the year-ago quarter.
Balance Sheet
At second quarter-end, Teradyne’s cash and cash equivalents (including marketable securities) were $958.1 million, higher than $804.5 million in the prior quarter.
Net cash provided by operating activities were $225.8 million in the second quarter versus $43.1 million in the prior quarter.
During the quarter, the company repurchased $9.4 million of its common stock and paid $16.6 million as dividends.
Guidance
Management expects third-quarter 2020 revenues in the band of $745-$805 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of $1.01-$1.17.
Management provided encouraging third-quarter guidance to reflect increased memory and storage test shipments, along with production ramps of new product design wins in SOC test.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 70.63% due to these changes.
VGM Scores
At this time, Teradyne has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Teradyne has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.