Teradyne (TER) Surpasses Q1 Earnings & Revenue Estimates

Teradyne Inc. TER reported first-quarter 2019 earnings of 54 cents per share, surpassing the Zacks Consensus Estimate by 10 cents. The figure also increased 20% year over year.

Moreover, revenues of $494.1 million increased 1.4% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $476 million and came ahead of the guided range of $460-$490 million.

Approximately 69% of revenues came from semiconductor Testing platforms, 13.4% from Industrial Automation, 11.7% from system Test business and the remaining 5.9% from wireless Test business.

Inside the Headlines

The increase in total revenues was driven by escalating demand for System test business.

Teradyne’s Industrial Automation segment recorded 35% year-over-year growth in the first quarter. The growth was driven by strength in Universal Robots and the addition of Mobile Industrial Robots (MiR).

Margins

Pro-forma gross margin was 58.2%, up 290 basis points (bps) from the prior-year quarter. The increase was due to cost-reduction efforts and favorable product mix.

Total operating expenses (Selling and administrative & Engineering and development) of $487.8 million increased 12.2% year over year. As a percentage of sales, both selling & administrative expenses and engineering & development costs increased from the year-ago quarter. As a result, adjusted operating margin came in at 18.8%, down 120 bps from the year-ago quarter.

Balance Sheet

At the end of the first quarter, Teradyne’s cash and cash equivalents was $483.7 million, lower than $926.8 million in fourth-quarter 2018.

The company repurchased $156.5 million of its common shares in the first quarter and paid $15.6 million as dividends.

Guidance

Management expects second-quarter 2019 revenues in the band of $520-$550 million. Non-GAAP earnings per share from continuing operations are likely to be in the range of 56-65 cents.

The Zacks Consensus Estimate for second-quarter revenues and earnings is pegged at $537.8 million and 60 cents, respectively.

Teradyne, Inc. Price, Consensus and EPS Surprise

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

Zacks Rank and Key Picks

Currently, Teradyne carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Amazon AMZN, Ctrip.com International, Ltd. CTRP and Square SQ, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Amazon, Ctrip.com and Square is currently projected at 31.2%, 23% and 25%, respectively.

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