Teradyne, Inc.
Teradyne, Inc. Fundamental Analysis
Teradyne, Inc. (TER) shows strong financial fundamentals with a PE ratio of 62.43, profit margin of 22.55%, and ROE of 29.72%. The company generates $3.8B in annual revenue with strong year-over-year growth of 13.13%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 83.2/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze TER's fundamental strength across five key dimensions:
Efficiency Score
ExcellentTER demonstrates superior asset utilization.
Valuation Score
ModerateTER shows balanced valuation metrics.
Growth Score
ModerateTER shows steady but slowing expansion.
Financial Health Score
ExcellentTER maintains a strong and stable balance sheet.
Profitability Score
ExcellentTER achieves industry-leading margins.
Key Financial Metrics
Is TER Expensive or Cheap?
P/E Ratio
TER trades at 62.43 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, TER's PEG of 1.21 indicates fair valuation.
Price to Book
The market values Teradyne, Inc. at 16.96 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 48.43 times EBITDA. This signals the market has high growth expectations.
How Well Does TER Make Money?
Net Profit Margin
For every $100 in sales, Teradyne, Inc. keeps $22.55 as profit after all expenses.
Operating Margin
Core operations generate 26.92 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $29.72 in profit for every $100 of shareholder equity.
ROA
Teradyne, Inc. generates $19.26 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Teradyne, Inc. produces operating cash flow of $778.56M, showing steady but balanced cash generation.
Free Cash Flow
Teradyne, Inc. generates strong free cash flow of $553.65M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $3.54 in free cash annually.
FCF Yield
TER converts 1.04% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
62.43
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.21
vs 25 benchmark
P/B Ratio
Price to book value ratio
16.96
vs 25 benchmark
P/S Ratio
Price to sales ratio
14.09
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.03
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.15
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.30
vs 25 benchmark
ROA
Return on assets percentage
0.19
vs 25 benchmark
ROCE
Return on capital employed
0.30
vs 25 benchmark
How TER Stacks Against Its Sector Peers
| Metric | TER Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 62.43 | 36.81 | Worse (Expensive) |
| ROE | 29.72% | 974.00% | Weak |
| Net Margin | 22.55% | 5908812370.00% | Weak |
| Debt/Equity | 0.03 | 0.34 | Strong (Low Leverage) |
| Current Ratio | 2.15 | 4.93 | Strong Liquidity |
| ROA | 19.26% | -294678.00% (disorted) | Strong |
TER outperforms its industry in 3 out of 6 key metrics, particularly excelling in ROA, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Teradyne, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
8.54%
Industry Style: Growth, Innovation, High Beta
GrowingEPS CAGR
-24.96%
Industry Style: Growth, Innovation, High Beta
DecliningFCF CAGR
-17.57%
Industry Style: Growth, Innovation, High Beta
Declining