Shares of Teradyne Inc. TER hit a new 52-week high of $21.58 on Dec 23, eventually closing at $21.48. The company returned 5.9% in the past one-year period and approximately 8.5% year to date. Average volume of shares traded over the last three months was roughly 2,328K.
What is Driving Teradyne?
Teradyne is a leading provider of automated test equipment. The company is primarily focused on the semiconductor test market, from where it generates the bulk of its revenues. It also provides specialized system testing equipment for specific end markets.
We believe that the company is being driven by a recovery in the core semiconductor business (processors, MCUs and power management), long-term opportunities in the high-growth wireless test market, growing memory market exposure, product lineup and a lean cost structure.
The price appreciation may be attributed to Teradyne’s strong fundamentals and better-than-expected third-quarter fiscal 2015 results reported on Oct 27. Since then, the stock has gained 16.2%.
In the third quarter, Teradyne reported earnings of 40 cents per share, surpassing the Zacks Consensus Estimate by a couple of cents. The outperformance was backed by strong growth in the company’s Wireless Test and Semiconductor Test markets. Teradyne’s revenues of $466.0 million were in line with the Zacks Consensus Estimate and within management’s guided range of $450–$480 million.
For the upcoming fourth quarter, management expects revenues in the $295–$320 million range and non-GAAP earnings per share from continuing operations within 7 cents to 12 cents.
Moreover, Teradyne has an impressive record of returning cash to shareholders through share buybacks. The company also pays dividends on a regular basis. In the last reported quarter, Teradyne repurchased 5.4 million shares for $98.5 million and paid $12.6 million as dividends.
Additionally, Teradyne delivered an average positive earnings surprise of nearly 19.7% over the trailing four quarters. The company’s solid market position, the LitePoint acquisition, consistent design win momentum, continued innovation and strong long-term growth potential position it favorably.
Teradyne currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some well-ranked stocks in the technology space are NVIDIA Corporation NVDA and Stamps.com Inc. STMP, sporting a Zacks Rank #1 (Strong Buy), and Texas Instruments Inc. TXN carrying a Zacks Rank #2 (Buy).
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