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Why Is Teradyne (TER) Down 0.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Teradyne (TER - Free Report) . Shares have lost about 0.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Teradyne due for a breakout? 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 drivers.

Teradyne Q4 Earnings Beat Estimates

Teradyne reported fourth-quarter 2022 earnings of 92 cents per share, which surpassed the Zacks Consensus Estimate by 24.3%. However, the bottom line decreased 32.8% year over year and 20% sequentially.

Revenues of $731.8 million surpassed the Zacks Consensus Estimate of $710.6 million. The figure dipped 11.5% sequentially and 17% on a year-over-year basis.

The year-over-year decline was a result of declining Test and Industrial Automation revenues.

Revenue Details

Revenues from Semiconductor Test platforms, System Test business, Wireless Test business and Industrial Automation were $481 million (65.7% of total revenues), $100 million (13.7%), $40 million (5.6%) and $110 million (15%), respectively.

Revenues of Test and Industrial Automation declined 19.5% and 2.7% from the respective prior-year quarter’s levels.

Operating Results

Non-GAAP gross margin was 57.4%, contracting 210 basis points (bps) year over year.

Operating expenses increased 6.2% year over year to $253.9 million. As a percentage of revenues, operating expenses expanded 410 bps year over year to 34.7%.

Non-GAAP operating margin was 23.1%, which contracted 790 bps from the year-ago quarter’s reading.

Balance Sheet & Cash Flow

As of Dec 31, 2022, Teradyne’s cash and cash equivalents (including marketable securities) were $894.4 million, higher than $776.1 million as of Oct 2, 2022.

Net cash provided by operating activities was $183.4 million for the fourth quarter compared with $271.6 million in the prior quarter.


For the first quarter of 2023, Teradyne expects revenues between $550 million and $630 million.

Non-GAAP earnings are expected between 28 cents and 52 cents per share for fourth-quarter 2022.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -30.95% due to these changes.

VGM Scores

At this time, Teradyne has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Teradyne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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