It has been about a month since the last earnings report for Teradyne (
TER Quick Quote TER - Free Report) . Shares have added about 7.6% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Teradyne Q1 Earnings Beat Estimates
Teradyne reported first-quarter 2023 non-GAAP earnings of 55 cents per share, which surpassed the Zacks Consensus Estimate by 30.9%. However, the bottom line decreased 43.9% year over year and 40.2% sequentially.
Revenues of $617.5 million surpassed the Zacks Consensus Estimate of $591.7 million. The figure however declined 15.6% sequentially and 18.2% on a year-over-year basis. The year-over-year decline was a result of declining Test revenues. Further, supply-chain disruptions were headwinds. The company expects to witness sluggish demand in its Robotics business in the near term owing to slow industrial growth. Nevertheless, it expects an improvement in demand for automotive and industrial test equipment. Revenue Details
Revenues from Semiconductor Test platforms, System Test business, Wireless Test business and Robotics were $415 million (67.2% of total revenues), $75 million (12.1%), $39 million (6.3%) and $89 million (14.4%), respectively.
Gross margin was 57.7%, contracting 250 basis points (bps) year over year.
Operating expenses decreased 2.1% year over year to $263.6 million. As a percentage of revenues, operating expenses expanded 710 bps year over year to 42.7%. The non-GAAP operating margin was 17.1%, which contracted significantly from 27.4% in the prior-year quarter. Balance Sheet & Cash Flow
As of Apr 2, 2023, Teradyne’s cash and cash equivalents (including marketable securities) were $742.1 million, lower than $894.4 million as of Dec 31, 2022.
Net cash provided by operating activities was $19.3 million for the first quarter compared with $183.4 million in the prior quarter. Guidance
For the second quarter of 2023, Teradyne expects revenues between $625 million and $685 million.
Non-GAAP earnings are expected between 55 cents and 74 cents per share for second-quarter 2023. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 33.33% due to these changes.
Currently, Teradyne has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Teradyne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.