Core Insights - Investors in the Electronics - Miscellaneous Products sector should consider Hayward Holdings, Inc. (HAYW) and Teradyne (TER) for potential value opportunities [1] Valuation Metrics - HAYW has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while TER has a Zacks Rank of 5 (Strong Sell) [3] - HAYW's forward P/E ratio is 18.73, compared to TER's forward P/E of 24.46, suggesting HAYW is more attractively priced [5] - HAYW has a PEG ratio of 2.19, while TER's PEG ratio is 3.66, indicating HAYW's expected EPS growth is more favorable [5] - HAYW's P/B ratio is 2.07, significantly lower than TER's P/B of 4.77, further supporting HAYW's valuation advantage [6] - HAYW has a Value grade of B, while TER has a Value grade of F, highlighting HAYW's stronger valuation metrics [6] Conclusion - Given the stronger estimate revision activity and more attractive valuation metrics, HAYW is positioned as the superior option for value investors compared to TER [7]

Company Performance - Teradyne's stock closed at $88.51, reflecting a -0.41% change from the previous trading day, underperforming compared to the S&P 500's daily gain of 1.08% [1] - The stock has dropped by 22.78% in the past month, which is worse than the Computer and Technology sector's loss of 13.17% and the S&P 500's loss of 8.26% [2] - Upcoming earnings per share (EPS) is projected at $0.61, indicating a 19.61% increase year-over-year, with revenue expected to be $683.57 million, reflecting a 13.96% growth [3] Fiscal Year Estimates - For the entire fiscal year, earnings are estimated at $3.43 per share and revenue at $3.02 billion, showing increases of +6.52% and +7.19% respectively from the previous year [4] - Recent changes to analyst estimates suggest a positive outlook for the company's business, as these revisions often reflect short-term business trends [4] Valuation Metrics - Teradyne is currently trading at a Forward P/E ratio of 25.93, which is a premium compared to its industry's Forward P/E of 19.45 [7] - The PEG ratio for Teradyne is 3.88, significantly higher than the industry average PEG ratio of 1.44 [7] Industry Context - The Electronics - Miscellaneous Products industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 152, placing it in the bottom 40% of over 250 industries [8] - Historically, the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8] Analyst Ratings - The Zacks Rank system currently rates Teradyne as 5 (Strong Sell), with a recent 12.42% decrease in the consensus EPS estimate over the last 30 days [6]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Teradyne (TER), and highlights the potential misalignment of interests between brokerage firms and retail investors [1][4]. Brokerage Recommendation Summary - Teradyne has an average brokerage recommendation (ABR) of 1.69, indicating a consensus between Strong Buy and Buy, based on 16 brokerage firms' recommendations [2]. - Out of the 16 recommendations, 12 are classified as Strong Buy, accounting for 75% of the total recommendations [2]. Analysis of Brokerage Recommendations - The article suggests that relying solely on brokerage recommendations may not be prudent, as studies indicate these recommendations often fail to guide investors effectively towards stocks with high price appreciation potential [4]. - Brokerage firms tend to exhibit a strong positive bias in their ratings, with a ratio of five "Strong Buy" recommendations for every "Strong Sell" [5]. Zacks Rank Comparison - Zacks Rank, a proprietary stock rating tool, categorizes stocks from 1 (Strong Buy) to 5 (Strong Sell) and is based on earnings estimate revisions, which are more indicative of near-term stock price movements [7][10]. - The Zacks Rank is distinct from ABR, as it is a quantitative model that reflects timely earnings estimate revisions, while ABR may not always be up-to-date [8][11]. Teradyne's Earnings Outlook - The Zacks Consensus Estimate for Teradyne has decreased by 12.4% over the past month to $3.43, indicating growing pessimism among analysts regarding the company's earnings prospects [12]. - This decline in earnings estimates has resulted in a Zacks Rank of 5 (Strong Sell) for Teradyne, suggesting caution despite the Buy-equivalent ABR [13].

Company Performance - Teradyne's stock closed at $88.87, reflecting a -1.44% change from the previous session, underperforming compared to the S&P 500's daily loss of 1.07% [1] - Over the past month, Teradyne's shares have decreased by 20.38%, which is worse than the Computer and Technology sector's loss of 11.12% and the S&P 500's loss of 7.03% [2] - The upcoming earnings disclosure is projected to show earnings of $0.61 per share, indicating a year-over-year growth of 19.61%, with revenue expected to be $683.57 million, a 13.96% increase from the same quarter last year [3] Analyst Estimates - For the full year, earnings are projected at $3.43 per share and revenue at $3.06 billion, reflecting changes of +6.52% and +8.36% respectively from the previous year [4] - Recent changes in analyst estimates for Teradyne suggest a shifting business landscape, with positive revisions indicating a favorable business outlook [4] Valuation Metrics - Teradyne is currently trading at a Forward P/E ratio of 26.31, which is higher than the industry average of 19.46, suggesting a premium valuation [7] - The company has a PEG ratio of 3.93, significantly above the industry average PEG ratio of 1.45, indicating that Teradyne's stock may be overvalued relative to its expected earnings growth [8] Industry Context - The Electronics - Miscellaneous Products industry, which includes Teradyne, is ranked 149 out of over 250 industries, placing it in the bottom 41% of the Zacks Industry Rank [9] - Research indicates that industries in the top 50% of the Zacks Rank outperform those in the bottom half by a factor of 2 to 1 [9]

Core Viewpoint - Teradyne's shares declined by 21.4% following a negative update on trading conditions during its analyst day presentation, indicating significant market concerns about future performance [1]. Company Summary - Teradyne operates primarily in the automated test systems market for semiconductors and data electronics, which are cyclical and influenced by capital spending in key industries such as consumer electronics, industrial, automotive, aerospace, and defense [2]. - The company has revised its second-quarter and full-year revenue guidance downward due to uncertainties surrounding tariffs and trade restrictions, reflecting a slowdown in demand [2][4]. - The revised second-quarter revenue growth is now expected to be flat to down 10% from the first quarter, a significant change from the previous expectation of 5% to 10% growth [4]. - Full-year revenue growth is now projected to be up 5% to 10%, down from an earlier expectation of 15% [4]. Market Conditions - Management noted that while there have been no cancellations, there are delays and reviews of capital spending, which could indicate a broader trend of potential cancellations starting with push-outs [3]. - The macroeconomic uncertainty is affecting corporate and consumer decision-making, as seen in other companies like Delta Air Lines and 3M, which have also reported near-term impacts on their businesses [4].

Core Insights - The article discusses Teradyne's (NASDAQ: TER) estimated fair value of $130.8, based on a mid-term model projecting revenue growth of 13% to 20% through 2026 [1] Group 1: Company Analysis - Teradyne has a strong economic moat attributed to its "Fundamental Options" investment style, which combines fundamental analysis with options strategies [1] - The company employs various investment strategies, including income-oriented investments, growth at a reasonable price, deep value based on discounted cash flow, and dividend aristocrats [1] - Teradyne's investment approach includes long-term stock investments and 20-25 options strategies for purposes such as hedging, bullish substitutes, neutral trades, trading volatility, and earnings-related trades [1] Group 2: Analyst Background - The analyst has a background in software development, which informs their focus on technology investments [1] - Teaching and coaching in various life areas, including investing, is a passion for the analyst, who has authored a free local investing newsletter [1]

Core Viewpoint - Teradyne's recent earnings report shows strong performance driven by AI-related demand, with revenues and earnings surpassing estimates, but the stock has underperformed the S&P 500 in the past month [1][2]. Financial Performance - Teradyne reported Q4 2024 earnings of 95 cents per share, exceeding the Zacks Consensus Estimate by 5.56% and increasing 20.3% year over year [2]. - Revenues reached $753 million, beating the Zacks Consensus Estimate by 1.65% and reflecting a 12.2% year-over-year increase [2]. - Revenue breakdown: Semiconductor Test platforms ($561 million, 74.5%), System Test business ($58 million, 7.7%), Wireless Test business ($36 million, 4.8%), and Robotics ($98 million, 13%) [3]. Cost and Expenses - Selling and administrative expenses rose 9.4% year over year to $155.7 million, accounting for 20.7% of revenues, a decrease of 50 basis points year over year [4]. - Engineering and development expenses increased 25.6% year over year to $128.4 million, representing 17.1% of revenues, an increase of 180 basis points year over year [4]. Balance Sheet and Cash Flow - As of December 31, 2024, cash and cash equivalents were $599.6 million, up from $551.7 million as of September 29, 2024 [5]. - Net cash provided by operating activities was $2.82 billion in Q4, an increase from $1.66 billion in the prior quarter [5]. Guidance - For Q1 2025, Teradyne expects revenues between $660 million and $700 million, with non-GAAP earnings projected between 58 cents and 68 cents per share [6]. Market Sentiment - There has been an upward trend in estimates revision over the past month, indicating positive market sentiment [7]. - Teradyne holds a Growth Score of A but lags in Momentum Score with a D, and a D in value, placing it in the bottom 40% for this investment strategy [8]. Overall Outlook - The stock has an aggregate VGM Score of B, indicating a balanced performance across different investment strategies [9]. - Estimates have been trending upward, but the magnitude of revisions suggests a potential downward shift, with Teradyne holding a Zacks Rank 3 (Hold) [10].

Financial Performance - Total product revenue for the year ended December 31, 2024, was $2.3 billion, with a majority relating to certain product revenue[268]. - Total revenues for 2024 reached $2,819,880, an increase of 5.3% compared to $2,676,298 in 2023[276]. - Product revenues increased to $2,294,935 in 2024, up 9.5% from $2,096,286 in 2023[276]. - Net income for 2024 was $542,372, representing a 20.9% increase from $448,752 in 2023[276]. - Gross profit for 2024 was $1,648,927, a rise of 7.3% compared to $1,536,748 in 2023[276]. - Basic net income per share for 2024 was $3.41, up from $2.91 in 2023, marking a 17.2% increase[276]. - The company reported a gross margin of approximately 58.4% in 2024, compared to 57.4% in 2023[276]. Shareholder Activities - The company repurchased a total of 1,247 shares during the period from September 30, 2024, to December 31, 2024, at an average price of $115.95 per share[164]. - A new share repurchase program of $2.0 billion was approved in January 2023, replacing the previous program[166]. - Approximately 2,000 shares were withheld from employees for tax payments at an average price of $122.14[164]. - The excise tax incurred on share repurchases is included as part of the cost basis of shares repurchased[165]. Assets and Liabilities - Total assets increased to $3,708,714 in 2024, up from $3,486,824 in 2023, reflecting a growth of 6.4%[274]. - Total liabilities decreased to $889,420 in 2024, down 7.4% from $960,927 in 2023[274]. - Shareholders' equity rose to $2,819,294 in 2024, an increase of 11.6% from $2,525,897 in 2023[274]. Cash Flow and Investments - Cash flows from operating activities for 2023 were $672,176 thousand, compared to $585,231 thousand in 2022, reflecting a 14.9% increase[286]. - Investments in businesses amounted to $532,060 thousand in 2024, indicating a significant capital allocation strategy[286]. - The total cash and cash equivalents at the end of 2023 were $553,354 thousand, down from $757,571 thousand at the end of 2022[286]. Revenue Recognition and Deferred Revenue - Teradyne's total deferred revenue and customer advances increased to $148.215 million in 2024 from $137.086 million in 2023, representing an increase of approximately 8.3%[299]. - The company recognizes revenue from contracts with customers when control is transferred, following a five-step process as per ASC 606[292]. - Teradyne's unsatisfied performance obligations as of December 31, 2024, amounted to $1,162.2 million, with an expectation to recognize 88% of this in the next 12 months[344]. Foreign Currency and Hedging - The company has entered into foreign currency forward contracts to hedge against exchange rate fluctuations, with maturities of approximately one month[251]. - A sensitivity analysis indicated that a hypothetical 10% fluctuation in foreign exchange rates would not have a material effect on the company's consolidated financial position as of December 31, 2024[253]. - The change in fair value of outstanding foreign currency forward contracts resulted in a loss of $0.6 million at December 31, 2024, compared to a loss of $1.8 million at December 31, 2023[373]. Pension and Employee Benefits - The accumulated benefit obligation for U.S. defined benefit pension plans was $109.0 million in 2024, down from $142.2 million in 2023[429]. - The fair value of Teradyne's pension plans' assets totaled $83.4 million as of December 31, 2024, with $81.4 million related to the U.S. Plan[436]. - Teradyne's net periodic pension cost for 2024 was $773,000 for the U.S. Plan, compared to a cost of $2.566 million in 2023[431]. Goodwill and Intangible Assets - The total goodwill as of December 31, 2024, was $1.157933 billion, with no impairment recorded for the Robotics and Wireless Test reporting units during the annual goodwill impairment tests conducted in 2024 and 2023[404][402]. - Teradyne's aggregate intangible assets amortization expense for 2024 was $18.8 million, slightly down from $19.0 million in 2023[407]. - The carrying amount of developed technology intangible assets was $6.438 million as of December 31, 2024, after accounting for accumulated amortization and foreign currency translation adjustments[406]. Operational Efficiency - The company maintains effective internal control over financial reporting as of December 31, 2024, based on established criteria[259]. - Teradyne's engineering and development costs are primarily expensed as incurred, consisting mainly of salaries and contractor fees, reflecting the high technical nature of its products[326]. - The company plans to continue investing in new product development and market expansion strategies in the upcoming year[276].

Core Viewpoint - Teradyne's share price has declined 10.5% year to date, underperforming both the Zacks Computer & Technology sector and the Zacks Electronics - Miscellaneous Products industry [1] Financial Performance - Teradyne reported fourth-quarter 2024 revenues of $753 million, a 12.2% year-over-year increase, surpassing the Zacks Consensus Estimate by 1.65% [3] - Earnings for the same quarter were 95 cents per share, exceeding the consensus mark by 5.56% and reflecting a 20.3% year-over-year growth [3] - The Zacks Consensus Estimate for first-quarter 2025 earnings is 61 cents per share, indicating a 19.61% growth compared to the previous year [4] Market Outlook - The company expects first-quarter 2025 sales to be between $660 million and $700 million, indicating a sequential decline [2] - Teradyne's SOC and memory test revenues increased by 17% year over year in 2024, driven by strong demand for AI accelerator ASICs and High Bandwidth Memory [8] - The SOC Total Addressable Market is projected to grow approximately 7% year over year in 2025, supported by demand for AI Compute and recovery in various sectors [9] Business Segments - The Semiconductor Test outlook remains strong, while the Robotics forecast is seasonally soft due to a challenging industrial spending environment [2] - Teradyne's System and Wireless Test businesses experienced a combined revenue decline of 4% year over year in 2024, but the Wireless Test business is expected to return to growth in 2025 [13] - The company is restructuring its Robotics division to improve efficiency, with breakeven revenues expected to decline from $440 million in 2024 to $365 million in 2025 [14][15] Valuation and Stock Performance - Teradyne shares are currently trading at a forward 12-month P/E of 27.81X, compared to the broader sector's 26.88X, indicating a premium valuation [16] - The stock is trading below both the 50-day and 200-day moving averages, suggesting a bearish trend [19] Investment Considerations - Despite the robust and diversified portfolio, weaknesses in the Robotics and System/Wireless businesses, along with a stretched valuation, present risks for investors [21] - Teradyne currently holds a Zacks Rank 3 (Hold), suggesting that investors should wait for better entry points [22]

Core Viewpoint - Teradyne (NASDAQ: TER) experienced a significant stock price decline from $140 despite beating revenue and earnings expectations, attributed to perceived weak revenue guidance, which may be an overreaction by the market [1] Company Summary - Teradyne's stock price fell significantly after the last earnings call, indicating market concerns despite positive earnings results [1] - The company beat both revenue and earnings expectations, yet the market's reaction was negative due to the revenue guidance being viewed as weak [1] Analyst Background - The analyst has 10 years of experience in investment banking and specializes in industry and company research, particularly in semiconductors, robotics, and energy [1] - The analyst holds a degree in Mechanical Engineering and is licensed by the Brazilian Securities Commission as a portfolio manager and investment consultant [1] - The investment approach emphasizes growth at a reasonable price with a mid- to long-term investment horizon, focusing on companies in oligopolistic sectors with high barriers to entry [1]