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Teradyne (TER) Beats Earnings and Revenue Estimates in Q2

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Teradyne Inc. (TER - Free Report) reported second-quarter 2018 earnings of 59 cents per share, surpassing the Zacks Consensus Estimate by 10 cents. Earnings increased 32% sequentially but decreased 35% year over year.

Given the popularity of its products, strength in Universal Robots and continuous design wins, we are optimistic about Teradyne’s performance in the long run.

Following second-quarter results, the share price was up almost 9% in after-hours trading. Also, on a 12-month basis, the stock has outperformed the industry it belongs to. It has returned 11.7% compared with the industry’s rally of 10.1% in the same time frame.


Revenues of $526.9 million increased 14.9% sequentially but decreased 24.4% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $507 million and came in within management’s guided range of $490-$520 million.

Approximately 68% of the revenues came from semiconductor Testing platforms, 12% from Industrial Automation, 13% from system Test business and the remaining 7% from wireless Test business.

During the quarter, sales from Memory Test were up 34% from the year-ago quarter to $67 million, while the same from Universal Robots were up 45% year over year to $57 million.


According to the press release, pro-forma gross margin was 58.4%, up 310 basis points (bps) sequentially and 240 bps from the prior-year quarter. The increase was due to a favorable mix.

Total adjusted operating expenses of $174.8 million increased 1.4% year over year. Both selling & administrative and engineering & development expenses, as a percentage of sales, increased from a year ago. As a result, adjusted operating margin came in at 25.2%, up 370 bps sequentially but down 610 bps from the year-ago quarter.

Balance Sheet

Teradyne ended the second quarter with Trade receivables of $454.1 million, up from $414 million recorded in the last quarter.

Cash flow from operations was $130.2 million compared with ($81.9) million in the last reported quarter. Capex was $27.9 million compared with $34.8 million in the first quarter.

Share Repurchase/Dividend

In the reported quarter, Teradyne spent $226.5 million on share repurchases and paid $17.1 million as dividend.

Q3 Guidance

Management expects third-quarter revenues in the band of $540-$570 million, increasing 5.3% sequentially at the midpoint of the guided range. The Zacks Consensus Estimate is pegged at $518.2 million.

Non-GAAP earnings per share from continuing operations are likely to be in the range of 59-66 cents. The Zacks Consensus Estimate is pegged at 53 cents. GAAP earnings are expected within 51-59 cents.

Teradyne, Inc. Price, Consensus and EPS Surprise


Teradyne, Inc. Price, Consensus and EPS Surprise | Teradyne, Inc. Quote

Zacks Rank &Stocks to Consider

Currently, Teradyne carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Groupon (GRPN - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and Facebook (FB - Free Report) . While Groupon and IAC/InterActiveCorp sport a Zacks Rank #1 (Strong Buy), Facebook holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Groupon, IAC/InterActiveCorp and Facebook is currently projected to be 3%, 7.5% and 24.4%, respectively.

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