Earnings Preview: Teradyne - Analyst Blog

Teradyne Inc. ( TER ) is set to report first quarter 2013 results on Apr 24. Last quarter it posted a 600% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company's sales declined sequentially as well as year over year due to a seasonal slowdown and the recent economic downturn. The company saw some progress around its bookings, which indicate that revenues could pick up soon.

However, the heavy expenditure incurred due to the launch of new products and lower volumes resulted in lower margins for Teradyne in the fourth quarter. Competitive pressures also forced Teradyne to lower prices, further hurting the margin.

In the past quarters, the LitePoint business has greatly helped the company to generate revenues from markets such as smartphones and tablets that witness much stronger growth than the company's traditional markets. We believe the LitePoint wireless testing business will continue to improve Teradyne's future growth prospects due to the significant opportunities unfolding in the high-growth wireless market.

Earnings Whispers?

The Zacks Consensus Estimate for the first quarter stands at 3 cents while that for fiscal 2013 stands at $1.34.

Teradyne has beaten estimates in all of the last four quarters, with a trailing four-quarter average positive surprise of 164.42%. The biggest increase was the 600.0% surprise in the fourth quarter of 2012.

There have been no estimate revisions in the last 30 and 60 days. For the first quarter, the Zacks Consensus Estimate has remained unchanged over the last 30 as well as 60 days. On the contrary, for 2013, the Zacks Consensus Estimate has gone down by almost 4.3% each over the last 30 days.

Currently, the stock carries a Zacks Rank #3 (Hold).

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Our model states that a stock needs to have both a positive earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You could, therefore, consider the following stocks instead:

Applied Materials, Inc. ( AMAT ), Earnings ESP of +7.69% and Zacks Rank #2 (Buy)

Intersil Corp. ( ISIL ), with an ESP of +62.5% and a Zacks Rank #3 (Hold) ( AMZN ), Earnings ESP of +100.0% and Zacks Rank #3 (Hold)

APPLD MATLS INC (AMAT): Free Stock Analysis Report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

INTERSIL CORP (ISIL): Free Stock Analysis Report

TERADYNE INC (TER): Free Stock Analysis Report

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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.

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

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