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Should Value Investors Buy Teradyne (TER) Stock?


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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Teradyne (TER) is a stock many investors are watching right now. TER is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.88, which compares to its industry's average of 23.57. TER's Forward P/E has been as high as 20.73 and as low as 12.86, with a median of 17.76, all within the past year.

Investors should also note that TER holds a PEG ratio of 1.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TER's PEG compares to its industry's average PEG of 2.02. Within the past year, TER's PEG has been as high as 2.01 and as low as 0.92, with a median of 1.50.

We should also highlight that TER has a P/B ratio of 4.18. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.76. Over the past 12 months, TER's P/B has been as high as 5.01 and as low as 3.34, with a median of 4.20.

Finally, our model also underscores that TER has a P/CF ratio of 24.84. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 26.19. Over the past year, TER's P/CF has been as high as 29.53 and as low as 14.10, with a median of 22.52.

Value investors will likely look at more than just these metrics, but the above data helps show that Teradyne is likely undervalued currently. And when considering the strength of its earnings outlook, TER sticks out at as one of the market's strongest value stocks.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Investing Ideas , Stocks
Referenced Symbols: TER



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