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What's in Store for Teradyne (TER) This Earnings Season?

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Teradyne Inc. (TER - Free Report) is slated to report fourth-quarter 2020 results on Jan 27. In the last reported quarter, it delivered an earnings surprise of 6.3%.

The stock outperformed earnings estimates in all the trailing four quarters, with the average being 15.5%.

Trend in Estimate Revision

For the fourth quarter, the Zacks Consensus Estimate for earnings has remained stable at 99 cents per share over the past 30 days. This indicates an increase of 12.5% from the year-ago reported figure.

The consensus mark for revenues is pegged at $71.66 million, implying an increase of 9.5% from the year-ago reported figure.

Teradyne, Inc. Price and EPS Surprise

Teradyne, Inc. Price and EPS Surprise

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

Factors to Note

Teradyne’s semiconductor Test revenues are likely to have got a boost in fourth-quarter 2020 owing to persistent growth in 5G infrastructure, strengthening of mobility, strong networking and growing memory test spending.

Markedly, the Industrial Automation business saw an improvement in the last reported quarter. The trend is expected to have continued in the to-be-reported quarter due to improving global manufacturing conditions and new products.

Stronger-than-expected System on a Chip test shipments driven by increased demand for mobility-related test capacity are expected to have aided revenue growth in the to-be-reported quarter.

Increasing complexity of processors and technologies, popularity of its products, growing demand for millimeter wave test capabilities — both in Semi Test and at LitePoint — and persistent design wins are expected to have driven Teradyne’s performance in the to-be-reported quarter.

However, weakness in a few end markets served by the company could have been a headwind during the quarter.

For the to-be-reported quarter, management expects total revenues in the range of $680-$740 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of $0.90-$1.06.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Teradyne this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Teradyne has a Zacks Rank #2.

Stocks to Consider

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post a positive earnings surprise in the quarter to be reported.

TE Connectivity Ltd. (TEL - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Microchip Technology Incorporated (MCHP - Free Report) has an Earnings ESP of +1.48% and a Zacks Rank #2.

NXP Semiconductors N.V. (NXPI - Free Report) has an Earnings ESP of +1.30% and a Zacks Rank #2.

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