Teradyne, Inc (TER) stock analysis

P/E below its 5-year median

Teradyne's P/E of 30.5 is below its own 5-year median of 30.9.

P/E below the industry

Teradyne's P/E of 30.5 is below the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of 36.5.

EV/EBITDA below its 5-year median

Teradyne's EV/EBITDA of 23.5 is below its 5-year median of 24.8.

P/B above the industry

Teradyne's price-to-book of 11.25 is above the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of 3.17.

Trading below fair value

The share price of $265.78 is below our fair value estimate of $284.52.

Margin of safety under 20%

The price is 6.6% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 0.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -6.3% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 210% over the last twelve months, against a 5-year average of -6.7% a year.

Growing faster than the industry

Revenue grew 74.9% over the last twelve months; the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median is 8.4%.

Guidance issued

The latest outlook (fourth quarter of 2026 revenue, Oct 28, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 59.3% over the last twelve months, against 58.9% a year earlier.

Return on equity over 15%

Return on equity was 42.9% over the last twelve months and averaged 25.8% over five years.

Return on capital over 10%

Return on invested capital was 47.3%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Teradyne's return on equity of 42.9% is above the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of 1.1%.

Earnings shrank over 5 years

Net income shrank 6.7% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 27.5% over the last twelve months, against a 5-year average of 20.7%.

Net margin above the industry

Teradyne's net margin of 27.5% is above the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of -1.3%.

No debt

Teradyne has no borrowings on its latest balance sheet.

Debt not rising

With no debt today, leverage cannot have risen.

Debt covered by cash flow

There is no debt to cover.

Interest well covered

Operating income covers interest expense 147.1 times.

Short-term assets cover short-term debts

Current assets are 2.08 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 17.17; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Teradyne paid dividends worth 0.2% of the share price over the last twelve months.

Yield below Treasuries

The 0.2% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Teradyne yields 0.2%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 5.8% of net income.

Covered by free cash flow

Dividends take 7.8% of free cash flow.