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Teradyne (TER) Beats Earnings and Revenue Estimates in Q4
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Teradyne Inc. (TER - Free Report) reported fourth-quarter 2016 earnings of 32 cents per share, surpassing the Zacks Consensus Estimate of 21 cents. Adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Following better-than-expected results, share price gained more than 1%.
Over the past one year, shares of Teradyne underperformed the Zacks categorized Electronic Testing Equipment industry. While the industry gained 40.60%, the stock returned only 38.26%.
Revenues
Revenues of $380.0 million decreased 7.4% sequentially but increased 19.3% year over year. However, the figure came above the Zacks Consensus Estimate of $345.0 million and management’s guided range of $330–$360 million.
Approximately 71% of revenues came from semiconductor testing platforms, 13% from system test business, 7% from wireless test, and the remaining 9% from Industrial Automation.
Bookings
Total orders amounted to $628.0 million, up 66.1% sequentially. On a sequential basis, Semiconductor Test orders were up 109.6% to $524.0 million and Industrial Automation orders were up 41.7% to $34.0 million. However, Systems Test orders decreased 38.2% to $47 million and Wireless Test Group orders decreased 4.2% to $23 million.
Margins
Pro-forma gross margin was 57.4%, up 194 basis points (bps) sequentially and 529 bpsyear over year. The increase was due to higher revenues and a favorable mix.
Total adjusted operating expenses of $148.3 million decreased 0.8% sequentially and 1.6% year over year. As a percentage of sales, both engineering & development expenses and selling & administrative expenses decreased. As a result, adjusted operating margin came in at 18.4%, down 69 bps sequentially but up1,357 bps year over year.
GAAP net income was $66.3 million in the fourth quarter against net loss of $641.0 million in the year-ago quarter. Excluding special items but including stock-based compensation expense, non-GAAP net income came in at $64.9 million or 32 cents per share compared with $26.7 million or 13 cents in the year-ago quarter.
Balance Sheet
Teradyne ended the quarter with cash and cash equivalents and marketable securities balance of $1.18 billion, up from $896.4 million in the prior quarter. Trade receivables were $192.4 million, up from $163.2 million last quarter.
Cash flow from operations was $36.4 million compared with $203.8 million in the previous quarter. Capex was $19.0 million compared with $19.7 million in the third quarter.
Share Repurchase/Dividend
In the reported quarter, Teradyne spent $61.2 million on share repurchases and paid out $12.1 million as dividend.
During the quarter, management also said that it plans to repurchase a minimum of $200 million in 2017 and increase the dividend to 7 cents per quarter.
Q1 Guidance
Management expects first-quarter revenues in the $420–$450 million range, up 14.5% sequentially at the mid-point. The Zacks Consensus Estimate is pegged at $397.3 million.
Non-GAAP earnings per share from continuing operations are likely to range within 33 cents to 40 cents. The Zacks Consensus Estimate is pegged at 27 cents. GAAP earnings are expected in the range of 28–34 cents.
Conclusion
Teradyne is a leading provider of automated test equipment. The company reported decent fourth-quarter results, with both the top line and the bottom line outperforming the respective Zacks Consensus Estimate.
Management expects strong demand in its core test businesses in the upcoming quarter. Given the popularity of its products, the Universal Robots acquisition and continuous design wins, we are optimistic about Teradyne’s performance over the long term. However, weakness in the wireless test market could be a near-term concern.
Intersil Corporation delivered a positive earnings surprise of 20.42%, on average, in the trailing four quarters.
NVIDIA Corporation delivered a positive earnings surprise of 24.93%, on average, in the trailing four quarters.
Itron, Inc. delivered a positive earnings surprise of 30.55%, on average, in the past four quarters.
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Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>
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Teradyne (TER) Beats Earnings and Revenue Estimates in Q4
Teradyne Inc. (TER - Free Report) reported fourth-quarter 2016 earnings of 32 cents per share, surpassing the Zacks Consensus Estimate of 21 cents. Adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Following better-than-expected results, share price gained more than 1%.
Over the past one year, shares of Teradyne underperformed the Zacks categorized Electronic Testing Equipment industry. While the industry gained 40.60%, the stock returned only 38.26%.
Revenues
Revenues of $380.0 million decreased 7.4% sequentially but increased 19.3% year over year. However, the figure came above the Zacks Consensus Estimate of $345.0 million and management’s guided range of $330–$360 million.
Approximately 71% of revenues came from semiconductor testing platforms, 13% from system test business, 7% from wireless test, and the remaining 9% from Industrial Automation.
Bookings
Total orders amounted to $628.0 million, up 66.1% sequentially. On a sequential basis, Semiconductor Test orders were up 109.6% to $524.0 million and Industrial Automation orders were up 41.7% to $34.0 million. However, Systems Test orders decreased 38.2% to $47 million and Wireless Test Group orders decreased 4.2% to $23 million.
Margins
Pro-forma gross margin was 57.4%, up 194 basis points (bps) sequentially and 529 bpsyear over year. The increase was due to higher revenues and a favorable mix.
Total adjusted operating expenses of $148.3 million decreased 0.8% sequentially and 1.6% year over year. As a percentage of sales, both engineering & development expenses and selling & administrative expenses decreased. As a result, adjusted operating margin came in at 18.4%, down 69 bps sequentially but up1,357 bps year over year.
GAAP net income was $66.3 million in the fourth quarter against net loss of $641.0 million in the year-ago quarter. Excluding special items but including stock-based compensation expense, non-GAAP net income came in at $64.9 million or 32 cents per share compared with $26.7 million or 13 cents in the year-ago quarter.
Balance Sheet
Teradyne ended the quarter with cash and cash equivalents and marketable securities balance of $1.18 billion, up from $896.4 million in the prior quarter. Trade receivables were $192.4 million, up from $163.2 million last quarter.
Cash flow from operations was $36.4 million compared with $203.8 million in the previous quarter. Capex was $19.0 million compared with $19.7 million in the third quarter.
Share Repurchase/Dividend
In the reported quarter, Teradyne spent $61.2 million on share repurchases and paid out $12.1 million as dividend.
During the quarter, management also said that it plans to repurchase a minimum of $200 million in 2017 and increase the dividend to 7 cents per quarter.
Q1 Guidance
Management expects first-quarter revenues in the $420–$450 million range, up 14.5% sequentially at the mid-point. The Zacks Consensus Estimate is pegged at $397.3 million.
Non-GAAP earnings per share from continuing operations are likely to range within 33 cents to 40 cents. The Zacks Consensus Estimate is pegged at 27 cents. GAAP earnings are expected in the range of 28–34 cents.
Conclusion
Teradyne is a leading provider of automated test equipment. The company reported decent fourth-quarter results, with both the top line and the bottom line outperforming the respective Zacks Consensus Estimate.
Management expects strong demand in its core test businesses in the upcoming quarter. Given the popularity of its products, the Universal Robots acquisition and continuous design wins, we are optimistic about Teradyne’s performance over the long term. However, weakness in the wireless test market could be a near-term concern.
Teradyne, Inc. Price, Consensus and EPS Surprise
Teradyne, Inc. Price, Consensus and EPS Surprise | Teradyne, Inc. Quote
Stocks to Consider
Currently, Teradyne has a Zacks Rank #3 (Hold). Stocks worth considering in the industry include Intersil Corporation , NVIDIA Corporation (NVDA - Free Report) and Itron, Inc. (ITRI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intersil Corporation delivered a positive earnings surprise of 20.42%, on average, in the trailing four quarters.
NVIDIA Corporation delivered a positive earnings surprise of 24.93%, on average, in the trailing four quarters.
Itron, Inc. delivered a positive earnings surprise of 30.55%, on average, in the past four quarters.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>