Why Is Teledyne (TDY) Down 4% Since Last Earnings Report?

A month has gone by since the last earnings report for Teledyne Technologies (TDY). Shares have lost about 4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Teledyne due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Teledyne Technologies Q1 Earnings Top, '19 EPS View Up

Teledyne Technologies reported first-quarter 2019 earnings of $2.02 per share, which surpassed the Zacks Consensus Estimate of $1.92 by 5.2%. The bottom line also improved 13.2% from the year-ago quarter’s figure of $1.81.

The year-over-year bottom-line growth can be attributed to solid sales and an improvement in the operating income that Teledyne witnessed in the reported quarter.

Operational Highlights

In the quarter under review, total sales amounted to $745.2 million, which exceeded the Zacks Consensus Estimate of $732 million by 1.9%. The top line also increased 7.1% from $695.6 million registered a year ago. Notably, all segments recorded solid year-over-year sales growth in the first quarter.

Segmental Performance

Instrumentation: Sales at this segment rose 7.3% year over year to $256.5 million in the first quarter. Increased sales of test and measurement instrumentation, environmental instrumentation and marine instrumentation led to the upside.

Operating income surged 43.5% year over year to $39.9 million on account of increased sales and higher margins across most product lines.

Digital Imaging: Quarterly sales at this division increased 11.5% year over year to $235.3 million. The improvement can be attributed to increased sales of X-ray detectors for life sciences applications, aerospace, defense and MEMS products. Also, sales from the acquisition of the Scientific Imaging businesses of Roper Technologies contributed to the top line.

Operating income grew 6.9% year over year to $37 million backed by higher sales.

Aerospace and Defense Electronics: At this segment, quarterly sales of $180.4 million rose 3.9% from the prior-year quarter number owing to increased sales of defense and aerospace electronics.

Operating income rose 6.6% year over year to $33.8 million driven by higher sales and improved margins.

Engineered Systems: Sales at this division grew 1.4% year over year to about $73 million in the first quarter. The uptick was driven by higher sales of engineered products and services.

Operating income declined 34.7% to $4.7 million on account of lower sales of turbine engines.

Financial Condition

Teledyne’s cash totaled $106.2 million as of Mar 31, 2019, compared with $142.5 million at the end of 2018. Total debt summed $856.4 million compared with $747.5 million at 2018 end.

Cash from operations at the end of first quarter amounted to $80.1 million compared with $71.6 million at 2018’s first quarter.

In the reported quarter, capital expenditures were $21.3 million compared with $19.8 million in the year-ago quarter. Moreover, the company generated free cash flow of $58.8 million, reflecting 13.5% annual growth.


Teledyne expects to generate GAAP earnings per share of $2.38-$2.43 in the second quarter of 2019. For 2019, the company has raised its earnings expectations from the range of $9.25-$9.35 per share to $9.45-$9.55.

Currently, the Zacks Consensus Estimate for Teledyne’s full-year earnings is pegged at $9.38, lower than the company’s bottom-line expectations.



How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Teledyne has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


Teledyne has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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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.

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