What's in Store for Teradyne (TER) this Earnings Season?

Teradyne Inc.TER is slated to report fourth-quarter 2016 results on Jan 25. In the last-reported quarter, Teradyne recorded a positive earnings surprise of 22.22%.

Over the past one year, shares of Teradyne underperformed the Zacks categorized Electronic Testing Equipment industry. While the industry gave a positive return of 37.42%, the stock gained only 35.24%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Teradyne posted strong third-quarter results, exceeding the Zacks Consensus Estimate on both counts. Teradyne's earnings were backed by higher-than-expected revenues which were above the Zacks Consensus Estimate of $392.0 million and management's guided range of $375-$405 million.

Proforma gross margin was 55.5%, up 233 basis points (bps) sequentially due to a favorable mix.

The popularity of its products, acquisitions of LitePoint and Universal Robots and continuous design wins are expected to drive its results in the to-be reported quarter. However, weakness in a few end markets could be a headwind.

For the fourth quarter, management expects revenues in the $330-$360 million range, up 15.9% sequentially at the mid-point. The Zacks Consensus Estimate is pegged at $345.3 million. Non-GAAP earnings per share from continuing operations are likely to range within 18 cents to 25 cents. GAAP earnings are expected in the range of 17-26 cents.

Earnings Whispers

Our proven model does not conclusively show that Teradyne will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 22 cents. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Teradyne currently has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Teradyne, Inc. Price and EPS Surprise

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

Stocks to Consider

You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:

Corning Incorporated GLW , with an Earnings ESP of +2.27% and a Zacks Rank #2.

Seagate Technology plc STX , with an Earnings ESP of +1.87% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

Microsoft Corporation MSFT , with an Earnings ESP of +1.28% and a Zacks Rank #2.

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Seagate Technology PLC (STX): Free Stock Analysis Report

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Corning Incorporated (GLW): 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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