Teradyne Inc. TER reported first-quarter 2018 earnings of 45 cents per share, surpassing the Zacks Consensus Estimate by 42 cents. Earnings decreased 3% sequentially but increased 3% year over year.
Given the popularity of its products, acquisition of Universal Robots and continuous design wins, we are optimistic about Teradyne's performance in the long run. However, weakness in the wireless Test market could be a near-term concern.
On a 12-month basis, the stock has underperformed the industry it belongs to. It has returned 23.7% compared with the industry 's gain of 24.6%.
Revenues of $487.5 million increased 1.7% sequentially and 6.7% year over year. Also, the figure came in above the Zacks Consensus Estimate of $476 million and within management's guided range of $460-$490 million.
Approximately 76% of the revenues came from semiconductor Testing platforms, 10% from Industrial Automation, 9% from system Test business and the remaining 5% from wireless Test business.
During the quarter, Memory Test sales were up 210% from the year-ago quarter, while the same from Universal Robots were up 34% year over year.
According to the press release, pro-forma gross margin was 55.3%, down 120 basis points (bps) sequentially and 270 bps from the prior-year quarter. The decrease was due to unfavorable mix.
Total adjusted operating expenses of $164.9 million increased 2.6% year over year. As a percentage of sales, selling & administrative expenses remained flat, while the same from engineering & development decreased. As a result, adjusted operating margin came in at 21.5%, down 170 bps sequentially and 130 bps from the year-ago quarter.
Teradyne ended the quarter with Trade receivables of $414 million, up from $272.8 million last quarter.
Cash flow from operations was ($81.9) million compared with $147.5 million in the previous quarter. Capex was $34.8 million compared with $32.1 million in the fourth quarter.
In the reported quarter, Teradyne spent $134.3 million on share repurchases and paid $17.6 million as dividend.
Management expects second-quarter revenues in the range of $490-$520 million, increasing 4% sequentially at the midpoint. The Zacks Consensus Estimate is pegged at $698.3 million.
Non-GAAP earnings per share from continuing operations are likely to be in the range of 45-52 cents. The Zacks Consensus Estimate is pegged at 95 cents. GAAP earnings are expected within 39-46 cents.
Teradyne, Inc. Price, Consensus and EPS Surprise
Teradyne, Inc. Price, Consensus and EPS Surprise | Teradyne, Inc. Quote
Stocks to Consider
Teradyne carries a Zacks Rank #3 (Hold). Other top-ranked stocks in the technology sector are Internap Corporation INAP , Etsy, Inc. ETSY and HealthStream, Inc. HSTM , each sporting a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank(Strong Buy) stocks here .
Long-term earnings per share growth rate for Internap, Etsy and HealthStream is projected to be 2%, 17.3% and 16%, respectively.
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