Should Value Investors Buy Teradyne (TER) Stock?

Shutterstock photo

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Teradyne (TER) is a stock many investors are watching right now. TER is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 14.19, while its industry has an average P/E of 22.74. Over the last 12 months, TER's Forward P/E has been as high as 20.73 and as low as 12.86, with a median of 17.75.

Investors should also note that TER holds a PEG ratio of 1.08. 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 1.85. Within the past year, TER's PEG has been as high as 2.01 and as low as 0.92, with a median of 1.48.

Another notable valuation metric for TER is its P/B ratio of 4.04. 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 4.61. Over the past year, TER's P/B has been as high as 5.01 and as low as 3.34, with a median of 4.22.

Finally, investors should note that TER has a P/CF ratio of 23.99. 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. TER's current P/CF looks attractive when compared to its industry's average P/CF of 25.45. TER's P/CF has been as high as 29.53 and as low as 14.10, with a median of 23.68, all within the past year.

These are only a few of the key metrics included in Teradyne's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, TER looks like an impressive value stock at the moment.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Teradyne, Inc. (TER): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?