Teradyne’s Share Price Drops 15% Despite Earnings Growth Rate of 21% CAGR
May 2, 2023
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Shareholders of Teradyne ($NASDAQ:TER), Inc., a company that provides automated test and inspection equipment and software, may be surprised to see their share price drop 15% despite the 21% CAGR delivered to them. Teradyne has seen strong growth in its earnings over the last period, with a 21% Compound Annual Growth Rate (CAGR) in net income.
However, this positive growth in earnings has not translated into an increase in share price, leading some to speculate as to why the share price has fallen. However, since then the company has taken strict measures to prevent similar occurrences, making sure that all of its subsidiaries abide by the highest standards of corporate ethics and integrity.
Additionally, Teradyne recently announced a share buyback program and is investing heavily in research and development, both of which are seen as positive catalysts for future growth. Ultimately, shareholders should be encouraged by the strong growth rate in earnings as well as the potential upsides from the share buyback and R&D investments. While there is some uncertainty surrounding the drop in share price, investors should keep a close eye on developments at Teradyne to gauge any potential impact on their shareholdings.
Market Price
On Monday, TERADYNE saw its share price drop by 15% despite the company’s earnings growth rate of 21% CAGR. The stock opened at $91.7 and closed at $92.3, up by 1.0% from prior closing price of 91.4. This is a major departure from the company’s overall trend of strong performance and growth. Despite the drop in share price, TERADYNE’s long-term investors remain confident in the company’s financial prospects. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Teradyne. More…
| Total Revenues | Net Income | Net Margin |
| 3.02k | 637.1 | 21.1% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Teradyne. More…
| Operations | Investing | Financing |
| 589.8 | 31.6 | -767.86 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Teradyne. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 3.38k | 933.95 | 15.74 |
Key Ratios Snapshot
Some of the financial key ratios for Teradyne are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 6.4% | 5.0% | 25.1% |
| FCF Margin | ROE | ROA |
| 14.2% | 19.3% | 14.0% |
Analysis
GoodWhale has conducted an analysis of TERADYNE‘s wellbeing, and the results are very promising. Our Star Chart shows that TERADYNE is strong in asset, dividend, and profitability. It also has medium growth, which puts it in the ‘rhino’ category of companies – those that have achieved moderate revenue or earnings growth. Investors may be interested in TERADYNE for its potential for long-term stability and profitability. We have assigned it a high health score of 10/10, indicating that its cashflows and debt are sufficient to safely ride out any crisis without the risk of bankruptcy. This makes it an attractive option for those looking for steady, reliable returns. More…
Peers
The competition between Teradyne Inc and its competitors is fierce. Lam Research Corp, Taiwan Semiconductor Manufacturing Co Ltd, and Apple Inc are all major players in the market. Teradyne Inc has been able to stay ahead of the competition by innovating and developing new products.
– Lam Research Corp ($NASDAQ:LRCX)
Lam Research Corporation is an American company that manufactures semiconductor processing equipment used in the fabrication of integrated circuits. The company was founded in 1980 and is headquartered in Fremont, California. Lam Research has a market capitalization of $51.81 billion as of March 2021 and a return on equity of 54.63%. The company’s products are used in a variety of applications, including memory chips, microprocessors, and graphics processors.
– Taiwan Semiconductor Manufacturing Co Ltd ($TWSE:2330)
With a market cap of 9.75T as of 2022, Taiwan Semiconductor Manufacturing Co Ltd is one of the largest companies in the world. The company’s return on equity is 22.34%, meaning that it generates a significant amount of profit for shareholders. Taiwan Semiconductor Manufacturing Co Ltd is a leading provider of semiconductor manufacturing services and one of the largest manufacturers of semiconductors in the world. The company’s products are used in a wide range of electronic devices, including computers, mobile phones, and consumer electronics.
– Apple Inc ($NASDAQ:AAPL)
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services. The company’s products and services include iPhone, iPad, Mac, iPod, Apple Watch, Apple TV, a portfolio of consumer and professional software applications, iCloud, and iTunes. Founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, Apple was incorporated as Apple Computer, Inc., in 1977. The word “Computer” was removed from the company’s name in 2007, as its traditional focus on personal computers shifted towards consumer electronics.
Summary
Investors should take caution when considering investing in Teradyne, Inc. due to the company’s lagging earnings growth rate. The company has delivered a 21% CAGR to shareholders, but the share price has dropped 15% in the last three months. It is important to consider the current market conditions when making an investing decision in Teradyne.
Financial analysts suggest that investors should analyze the company’s current financial performance and make an informed decision based on the data. They should also consider the reasons behind the decrease in share price and make sure that these issues can be addressed before investing.
