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Teradyne (TER) Beats Earnings and Revenue Estimates in Q2

Teradyne Inc.TER reported second-quarter 2016 earnings of 55 cents per share, surpassing the Zacks Consensus Estimate of 50 cents. Adjusted earnings per share exclude one-time items but include stock-based compensation expense.

Teradyne Inc. (TER) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Revenues

Revenues of $532.0 million increased 23.4% sequentially and 3.7% year over year. Also, the figure came above the Zacks Consensus Estimate of $525.0 million and on the high end of management's guided range of $510-$540 million.

Approximately 82% of revenues came from semiconductor testing platforms, 9% from system test business, 5% from Industrial Automation, and the remaining 4% from wireless test.

Bookings

Total orders amounted to $471.0 million, down 21.1% sequentially. On a sequential basis, Semiconductor Test orders were down 4.2% to $391.0 million and Systems Test orders were down 34.8% to $30.0 million. However, Industrial Automation orders increased 44.4% to $26 million and Wireless Test Group orders decreased 15.0% to $23 million.

Margins

Pro-forma gross margin was 53.2%, down 19 basis points (bps) sequentially and 519 bps year over year. The decrease was due to an unfavorable mix.

Total adjusted operating expenses of $158.4 million increased 3.8% sequentially and 3.6% year over year. As a percentage of sales, engineering & development expenses decreased, while selling & administrative expenses increased. Adjusted operating margin came in at 23.4%, up 544 bps sequentially but down 516 bps year over year.

GAAP net loss was $223.5 million in the second quarter. In the prior-year quarter, the company had reported earnings of $102.9 million. Excluding special items but including stock-based compensation expense, non-GAAP net income came in at $111.7 million or 55 cents per share compared with $114.2 million or 53 cents in the year-ago quarter.

Balance Sheet

Teradyne ended the quarter with cash and cash equivalents and marketable securities balance of $823.2 million, up from $729.4 million in the prior quarter. Trade receivables were $349.5 million, up from $254.0 million in the last quarter.

Cash flow from operations was $180.7 million compared with $26.7 million in the previous quarter. Capex was $26.3 million compared with $20.3 million in the first quarter.

Share Repurchase/Dividend

In the reported quarter, Teradyne paid $28.8 million for share repurchases and $12.2 million as dividend.

Q3 Guidance

Management expects third-quarter revenues in the $375-$405 million range, down 26.7% sequentially at the mid-point. The Zacks Consensus Estimate is pegged at $475.9 million.

Non-GAAP earnings per share from continuing operations are likely to range within 23 cents to 30 cents. The Zacks Consensus Estimate is pegged at 43 cents. GAAP earnings are expected in the range of 22-30 cents.

TERADYNE INC Price, Consensus and EPS Surprise

TERADYNE INC Price, Consensus and EPS Surprise | TERADYNE INC Quote

Conclusion

Teradyne is a leading provider of automated test equipment. The company reported decent second-quarter results, with both the top line and the bottom line outperforming the respective Zacks Consensus Estimate.

Given the popularity of its products, the Universal Robots acquisition and continuous design win momentum, we are optimistic about Teradyne's performance over the long term. However, weakness in the wireless test market could be a concern in the near term.

Stocks to Consider

Currently, Teradyne has a Zacks Rank #3 (Hold). Some better-ranked stocks in the technology sector are NVIDIA Corporation NVDA and Cognex Corporation CGNX , sporting a Zacks Rank #1 (Strong Buy), and Intel Corp. INTC , carrying a Zacks Rank #2 (Buy).

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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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