Teradyne, Inc. (TER)
Valuation Overview•Is Teradyne, Inc. Overvalued or Undervalued?
Priced at a premium to peer multiples and intrinsic cash flows, demanding strong execution to justify current levels.
High-quality fundamentals with a strong composite quality score of 76/100, backed by robust profitability and solvency.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Solid fundamental quality, though growth presents a headwind.
Wall Street is cautious, forecasting potential downside alongside robust expected earnings growth. However, capital return yields remain modest, driven predominantly by aggressive share repurchases.
Returns capital exclusively via buybacks — no active dividend
TER demonstrates strong business quality with robust profitability and healthy margins. This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company exhibits steady, low-single-digit revenue growth however, earnings have severely contracted over the same period. This growth is supported by elite operational efficiency, sustaining an impressive 26.9% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $1.3B | +13.1% | +0.4% | +0.4% | +6.9% | |
| EBITDA | $475.2M | — | -4.5% | — | — | |
| Net Income | $398.9M | +2.2% | -8.2% | — | +10.4% | |
| EPS (Diluted) | $2.53 | +4.8% | -6.2% | -4.1% | +13.6% | |
| Free Cash Flow | $200.4M | -5.0% | +2.8% | -8.0% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 58.8% | 58.1% | 58.6% | 57.9% |
| Operating Margin | 26.9% | 20.5% | 24.1% | 21.8% |
| Net Margin | 22.6% | 17.8% | 20.7% | 18.0% |
| FCF Margin | 14.6% | 15.6% | 17.2% | 19.0% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $2.11 | $2.56 | +21.3% | ||
| Q1'26 | $1.38 | $1.80 | +30.4% | ||
| Q4'25 | $0.79 | $0.85 | +7.6% | ||
| Q3'25 | $0.54 | $0.57 | +5.2% | ||
| Q2'25 | $0.62 | $0.75 | +21.2% | ||
| Q1'25 | $0.91 | $0.95 | +4.4% | ||
| Q4'24 | $0.79 | $0.90 | +13.9% | ||
| Q3'24 | $0.77 | $0.86 | +11.7% |
Total return is +408.3% (1Y), outperforming the benchmark by +383.3%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +111.1% | +101.8% | — |
| 1Y | +408.3% | +383.3% | +0.6% |
| 3YCAGR | +59.3% | +36.1% | +1.3% |
| 5YCAGR | +28.7% | +13.5% | +1.8% |
| 10YCAGR | +36.6% | +22.3% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Teradyne, Inc. (TER) valuation, health, and returns.
Teradyne, Inc. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Expensive versus peers compared to industry peers. overvalued (implying -40.4% downside from DCF intrinsic value of $260.90)
Teradyne, Inc. has multiple valuation anchors: DCF Intrinsic Value: $260.90 | Peer Relative Fair Value: $306.24 | Wall Street Analyst Target: $351.09 (implying -19.8% upside). A convergence of these signals offers higher conviction.
Teradyne, Inc. displays good financial health with a composite quality score of 76/100, supported by a Altman Z-Score of 31.5 (safe zone), Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 19.8%.
Teradyne, Inc. returns capital via buybacks instead of dividends, carrying a 1.0% buyback yield and reducing outstanding shares by -3.5% in the last 12 months.
Teradyne, Inc.'s current growth trajectory is Accelerating. The company achieved +13.1% 1Y revenue growth and +4.8% 1Y EPS growth, compared to its 3Y revenue CAGR of +0.4%.
Wall Street consensus is Buy based on 31 analysts, beating EPS expectations in 100% of recent quarters with a 40-quarter streak. The consensus price target represents a -19.8% change from current levels.
Investment risks for Teradyne, Inc. include: -26.7% 1-year max drawdown, high beta (2.95x market volatility). Volatility risk is characterized by a beta of 2.95x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.