Teradyne Inc (TER) posted its fifth consecutive earnings surprise in April, sending earnings estimates to the highest level in 5 years.
Company Description
Teradyne makes in-circuit testing equipment for electronics. The company’s products can be found in the automotive, computing, telecomm and aerospace industries.
Revenues Surge
On Apr 21 Teradyne announced first quarter results that showed a 23% improvement in revenues sequentially and a 177% increase year-over-year. Net income came in over $61 million, up from a loss one year ago.
Earnings broke down to 33 cents per share, which was a dime higher than analysts expected. Teradyne has come in above the Zacks Consensus Estimate in each of the past 5 quarters.
Company, Analysts Raise Forecasts
Teradyne now expected to generate between $390 and $420 million in revenue next quarter, up from $290 million last quarter, which lead analysts to raise earnings estimates.
After 13 increases, the full-year Zacks Consensus Estimate for this year is $1.61, up 66 cents. This would mark a drastic improvement over the 27 cent loss in 2009.
Next year’s projections are averaging $1.68, a 52 cents improvement on the same number of revisions. This would be a 4% growth in 2011.
Good Value
Thanks to the sharp down turn on European debt worries, shares of TER are trading with very attractive valuations. The forward P/E is now in the single digits and the PEG ration is only 0.5.
Teradyne have a more conservative balance sheet than most of its peers. The debt-to-equity ratio is 0.2, while the industry average is over 34.
The Chart
Those full-year estimates are at the highest level in over 5 years right now. However, shares of TER remain well off of its highs. Teradyne can be volatile, but the overall trend is up. If you aren’t faint of heart this could be a good time to guy this Zacks #1 Rank (strong buy).
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