Teradyne (TER) Surpasses Q4 Earnings & Revenue Estimates

Teradyne Inc. TER reported fourth-quarter 2018 earnings of 63 cents per share, surpassing the Zacks Consensus Estimate by 13 cents. The figure increased 37% year over year.

Revenues of $519.6 million increased 8.4% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $496 million and the guided range of $480 and $510 million.

Approximately 65.8% of the revenues came from semiconductor Testing platforms, 16.2% from Industrial Automation, 10.4% from system Test business and the remaining 7.7% from wireless Test business.

Inside the Headlines

The increase in total revenues was driven by escalating demand for Semiconductor and Wireless test businesses.

Teradyne's Semiconductor Test Group witnessed an increase in revenues from record memory and analog devices, which helped offset the weakness in mobility test shipments in 2018.

Industrial Automation segment witnessed 38% growth year over year in 2018, but the growth was below the company's expectation. Notably, waning demand in China and the automotive sector negatively impacted growth of this segment in 2018.

Teradyne, Inc. Price, Consensus and EPS Surprise

Teradyne, Inc. Price, Consensus and EPS Surprise | Teradyne, Inc. Quote


Pro-forma gross margin was 59.6%, up 310 basis points (bps) from the prior-year quarter. The increase was due to cost reduction in the manufacture of Universal Robots and favorable product mix.

Total adjusted operating expenses of $197.3 million increased 11.9% year over year. As a percentage of sales, selling & administrative expenses increased from the year-ago quarter, while engineering & development decreased. As a result, adjusted operating margin came in at 25.8%, up 270 bps from the year-ago quarter.

Balance Sheet

As of Dec 31, 2018, Teradyne's cash and cash equivalents was $926.8 million, higher than $429.8 million as of Dec 31, 2017.

The company purchased $823 million of its common shares in 2018 and expects to repurchase $500 million of its common shares in 2019. Moreover, the company also declared a cash dividend of 9 cents per share for its shareholders.

Q1 Guidance

Management expects first-quarter 2019 revenues in the band of $460 and $490 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of 39 and 47 cents.

The Zacks Consensus Estimate for first-quarter revenues and earnings is pegged at $501.4 million and 50 cents, respectively.

Zacks Rank & Stocks to Consider

Teradyne currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader computer and technology sector include SYNNEX Corporation SNX , Twitter, Inc. TWTR and Cloudera, Inc. CLDR . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 stocks here.

Expected long-term earnings growth rate for SYNNEX, Twitter and Cloudera is 0.7%, 22.1% and 8%, respectively.

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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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