A month has gone by since the last earnings report for Teradyne (
TER Quick Quote TER - Free Report) . Shares have lost about 7.7% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Teradyne Q2 Earnings Beat Estimates
Teradyne reported second-quarter 2023 earnings of 79 cents per share, which surpassed the Zacks Consensus Estimate by 19.7%. However, the bottom line decreased by 34.7% year over year.
Revenues of $684.44 million surpassed the Zacks Consensus Estimate of $657.03 million. The figure dipped 19% on a year-over-year basis due to softness in robotics demand. Nevertheless, the company witnessed growing semiconductor test shipments during the reported quarter. Solid test demand for DRR5 and HBM memory devices for data center applications, as well as strengthening system-on-chip demand for automotive applications, remain positives. These factors are expected to aid the company’s performance in the days ahead. However, macroeconomic headwinds and sluggishness in industrial activities are expected to hurt order rates in the robotics business in the third quarter. Revenue Details
Revenues from Semiconductor Test platforms, System Test business, Wireless Test business and Robotics were $475 million (69.4% of total revenues), $94 million (13.7%), $44 million (6.4%) and $72 million (10.5%), respectively.
Gross margin was 58.8%, contracting 140 basis points (bps) year over year.
Operating expenses increased 1.6% year over year to $262.6 million. As a percentage of revenues, operating expenses expanded by 770 bps year over year to 38.4%. Non-GAAP operating margin was 22.1%, which contracted 820 bps from the year-ago quarter’s reading. Balance Sheet & Cash Flow
As of Jul 2, 2023, Teradyne’s cash and cash equivalents (including marketable securities) were $708.4 million, lower than $742.1 million as of Apr 2, 2023.
Net cash provided by operating activities was $142.8 million for the second quarter, up from $19.3 million in the prior quarter.
The company returned $152 million to shareholders in the form of share repurchases and dividends in the reported quarter.
For the third quarter of 2023, Teradyne expects revenues between $650 million and $710 million.
Non-GAAP earnings are expected between 61 cents and 81 cents per share for third-quarter 2023. How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
Currently, Teradyne has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward 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.