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Teradyne (TER) Beats Earnings and Revenue Estimates in Q1
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Teradyne Inc. (TER - Free Report) reported first-quarter 2017 earnings of 44 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. Also, earnings were up 41.9% year over year. Adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Following the first-quarter results, the share price surged 11.05%. The increase was driven by strong first-quarter guidance and better-than-expected second-quarter guidance.
In the last one year, shares of Teradyne outperformed the Zacks categorized Electronic Testing Equipment industry. While the industry gained 43.4%, the stock returned 60.9%.
Revenues
Revenues of $457 million increased 20.2% sequentially and 6% year over year. However, the figure came above the Zacks Consensus Estimate of $439.2 million and management’s guided range of $420–$450 million.
Approximately 78% of revenues came from semiconductor testing platforms, 9% from system test business, 5% from wireless test, and the remaining 8% from Industrial Automation.
Bookings
Total orders amounted to $595 million, down 5.3% sequentially but up 53% year over year. On a sequential basis, Wireless Test Group orders were up 17.4% to $27 million and Industrial Automation orders were up 32.4% to $45 million.
However, Systems Test orders decreased 2.1% to $46 million and Semiconductor Test orders decreased 9.2% to $476 million. Nevertheless, Semiconductor Test orders were up 56% year over year, driven by strength in its end markets, namely mobile, automotive, industrial analog, and Flash memory.
Margins
Pro forma gross margin was 58%, up 56 basis points (bps) sequentially and 463 bps year over year. The increase was due to higher revenues and a favorable mix.
Total adjusted operating expenses of $161.1 million increased 8.6% sequentially and 5.5% year over year. As a percentage of sales, engineering & development expenses decreased, while selling & administrative expenses increased. As a result, adjusted operating margin came in at 22.7%, up 435 bps sequentially and 480 bps year over year.
GAAP net income was $85.2 million in the first quarter against net income of $50 million in the year-ago quarter. Excluding special items but including stock-based compensation expense, non-GAAP net income came in at $88.7 million or 44 cents per share compared with $64.4 million or 31 cents in the year-ago quarter.
Balance Sheet
Teradyne ended the quarter with cash and cash equivalents and marketable securities balance of $1.22 billion, up from $1.18 billion in the prior quarter. Trade receivables were $315 million, up from $192.4 million last quarter.
Cash flow from operations was ($61.1) million compared with $36.4 million in the previous quarter. Capex was $22.1 million compared with $19 million in the fourth quarter.
Share Repurchase/Dividend
In the reported quarter, Teradyne spent $37.7 million on share repurchases and paid $14 million as dividend.
Q2 Guidance
Management expects second-quarter revenues in the $660–$700 million range, up 48.7% sequentially at the mid-point. The Zacks Consensus Estimate is pegged at $562.7 million.
Non-GAAP earnings per share from continuing operations are likely to be in the range of 81–90 cents. The Zacks Consensus Estimate is pegged at 60 cents. GAAP earnings are expected in the range of 77–86 cents.
Conclusion
Teradyne is a leading provider of automated test equipment. The company reported strong first-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 in the long run. However, weakness in the wireless test market could be a near-term concern.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 14%, on average, in the last four quarters.
Fortive Corporation delivered a positive earnings surprise of 6.11%, on average, in the trailing four quarters.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Teradyne (TER) Beats Earnings and Revenue Estimates in Q1
Teradyne Inc. (TER - Free Report) reported first-quarter 2017 earnings of 44 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. Also, earnings were up 41.9% year over year. Adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Following the first-quarter results, the share price surged 11.05%. The increase was driven by strong first-quarter guidance and better-than-expected second-quarter guidance.
In the last one year, shares of Teradyne outperformed the Zacks categorized Electronic Testing Equipment industry. While the industry gained 43.4%, the stock returned 60.9%.
Revenues
Revenues of $457 million increased 20.2% sequentially and 6% year over year. However, the figure came above the Zacks Consensus Estimate of $439.2 million and management’s guided range of $420–$450 million.
Approximately 78% of revenues came from semiconductor testing platforms, 9% from system test business, 5% from wireless test, and the remaining 8% from Industrial Automation.
Bookings
Total orders amounted to $595 million, down 5.3% sequentially but up 53% year over year. On a sequential basis, Wireless Test Group orders were up 17.4% to $27 million and Industrial Automation orders were up 32.4% to $45 million.
However, Systems Test orders decreased 2.1% to $46 million and Semiconductor Test orders decreased 9.2% to $476 million. Nevertheless, Semiconductor Test orders were up 56% year over year, driven by strength in its end markets, namely mobile, automotive, industrial analog, and Flash memory.
Margins
Pro forma gross margin was 58%, up 56 basis points (bps) sequentially and 463 bps year over year. The increase was due to higher revenues and a favorable mix.
Total adjusted operating expenses of $161.1 million increased 8.6% sequentially and 5.5% year over year. As a percentage of sales, engineering & development expenses decreased, while selling & administrative expenses increased. As a result, adjusted operating margin came in at 22.7%, up 435 bps sequentially and 480 bps year over year.
GAAP net income was $85.2 million in the first quarter against net income of $50 million in the year-ago quarter. Excluding special items but including stock-based compensation expense, non-GAAP net income came in at $88.7 million or 44 cents per share compared with $64.4 million or 31 cents in the year-ago quarter.
Balance Sheet
Teradyne ended the quarter with cash and cash equivalents and marketable securities balance of $1.22 billion, up from $1.18 billion in the prior quarter. Trade receivables were $315 million, up from $192.4 million last quarter.
Cash flow from operations was ($61.1) million compared with $36.4 million in the previous quarter. Capex was $22.1 million compared with $19 million in the fourth quarter.
Share Repurchase/Dividend
In the reported quarter, Teradyne spent $37.7 million on share repurchases and paid $14 million as dividend.
Q2 Guidance
Management expects second-quarter revenues in the $660–$700 million range, up 48.7% sequentially at the mid-point. The Zacks Consensus Estimate is pegged at $562.7 million.
Non-GAAP earnings per share from continuing operations are likely to be in the range of 81–90 cents. The Zacks Consensus Estimate is pegged at 60 cents. GAAP earnings are expected in the range of 77–86 cents.
Conclusion
Teradyne is a leading provider of automated test equipment. The company reported strong first-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 in the long run. 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
Other Stocks to Consider
Currently, Teradyne has a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the same space are Applied Materials (AMAT - Free Report) , KLA-Tencor (KLAC - Free Report) and Fortive Corporation (FTV - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 14%, on average, in the last four quarters.
Fortive Corporation delivered a positive earnings surprise of 6.11%, on average, in the trailing four quarters.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>