Teledyne (TDY) Soars to 52-Week High, Time to Cash Out?
Shares of Teledyne Technologies (TDY) have been strong performers lately, with the stock up 2.2% over the past month. The stock hit a new 52-week high of $330.67 in the previous session. Teledyne Technologies has gained 58% since the start of the year compared to the 26.3% move for the Zacks Aerospace sector and the 36.9% return for the Zacks Aerospace - Defense Equipment industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 23, 2019, Teledyne reported EPS of $2.84 versus consensus estimate of $2.53.
For the current fiscal year, Teledyne is expected to post earnings of $9.98 per share on $3.1 billion in revenues. This represents a 12.39% change in EPS on a 6.79% change in revenues. For the next fiscal year, the company is expected to earn $11.02 per share on $3.23 billion in revenues. This represents a year-over-year change of 10.47% and 4.16%, respectively.
Teledyne may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Teledyne has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 32.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 26.7X versus its peer group's average of 13.9X. Additionally, the stock has a PEG ratio of 4.37. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Teledyne currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Teledyne meets the list of requirements. Thus, it seems as though Teledyne shares could still be poised for more gains ahead.
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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.