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Teledyne (TDY) Up 1.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Teledyne Technologies (TDY - Free Report) . Shares have added about 1.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Teledyne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Teledyne Technologies Q2 Earnings Top, 2021 EPS View Up

Teledyne Technologiesreported second-quarter 2021 adjusted earnings of $4.61 per share, which surpassed the Zacks Consensus Estimate of $2.94 by 56.8%. The bottom line also improved 72% from the year-ago quarter’s $2.68.

Including one-time items, the company reported second-quarter GAAP earnings per share of $1.48 compared with the year-ago quarter’s $2.48.

Operational Highlights

In the quarter under review, total sales amounted to $1,121 million, which exceeded the Zacks Consensus Estimate of $1,004 million by 11.7%. Moreover, the top line improved 50.8% from $743.3 million a year ago. Except for the Engineered Systems segment, all other segments recorded solid year-over-year sales growth in the second quarter.

Segmental Performance

Instrumentation: Sales in this segment rose 10.6% year over year to $291.1 million in the second quarter. Increased sales of environmental instrumentation, and test and measurement instrumentation led to the unit’s sales upside.

Operating income rose 33.2% year over year to $64.6 million driven by higher sales and improved margins across most product categories, resulting from ongoing margin improvement initiatives.

Digital Imaging: Quarterly sales at this division increased 143.9% year over year to $579.5 million. The improvement can be attributed to incremental net sales from the FLIR acquisition as well as organic sales growth from industrial and scientific sensors and cameras, micro-electromechanical systems and geospatial imaging software.

Operating income grew 80.8% year over year to $84.6 million, reflecting the benefits of organic sales growth.

Aerospace and Defense Electronics: In this segment, quarterly sales of $152.4 million increased 6.5% from the prior-year quarter on account of higher sales for defense and space electronics.

Moreover, operating income soared 62.3% year over year to $28.4 million, driven by higher sales and a lower cost structure due to actions taken in 2020, lower severance, facility consolidation expenses and lower research and development costs..

Engineered Systems: Sales in this division dropped 1.5% year over year to about $98 million in the second quarter on account of lower sales of turbine engines.

Operating income rose 1.9% to $11 million driven by higher sales.

Financial Condition

Teledyne’s cash and cash equivalents totaled $695.1 million as of Jul 4, 2021, compared with $673.1 million at the end of 2020.

Long-term debt was $4,742 million compared with $680.9 million at 2020-end.

Cash from operations at the end of the second quarter amounted to $211.3 million compared with $155.8 million at the end of second-quarter 2020.

In the reported quarter, capital expenditures were $20.8 million compared with $16.6 million in the year-ago quarter. Moreover, the company generated adjusted free cash flow of $257.2 million compared with $139.2 million in the year-ago quarter.

Q3 & 2021 Guidance

Teledyne expects to generate adjusted earnings per share of $3.55-$3.65 in the third quarter of 2021. The Zacks Consensus Estimate for the same is pegged at $3.02 per share.

For 2021, the company now expects to generate adjusted earnings per share in the range of $15.25-$15.50, higher than the prior guided range of $12.00-$12.20. Currently, the Zacks Consensus Estimate for Teledyne’s full-year earnings is pegged at $12.89 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 21.74% due to these changes.

VGM Scores

Currently, Teledyne has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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 this revision looks promising. Notably, Teledyne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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