Investment Thesis
Teradyne demonstrates exceptional financial health with strong profitability metrics, robust revenue growth of 13.1% YoY, and excellent cash generation capability. The company maintains zero long-term debt, superior liquidity ratios, and converts 14.1% of revenue into free cash flow, indicating high-quality earnings and operational efficiency.
TER Strengths
- Outstanding profitability with 58.2% gross margin and 20.4% operating margin
- Strong revenue growth of 13.1% YoY paired with stable net margins at 17.4%
- Excellent cash flow generation with $450.4M free cash flow and 67.2% operating cash flow conversion
- Zero long-term debt with $293.8M cash position and 95.0x interest coverage ratio
- Superior returns on equity (19.8%) and assets (13.2%) indicating efficient capital deployment
- Strong liquidity position with 1.75x current ratio and 1.41x quick ratio
TER Risks
- Net income growth flat at 0.0% YoY despite 13.1% revenue growth, suggesting margin compression or one-time items
- High insider activity with 22 Form 4 filings in last 90 days warrants monitoring for potential confidence concerns
- Exposure to cyclical semiconductor testing equipment market which can face demand volatility
- Capital intensity with $224.0M capex annually reducing overall free cash flow conversion potential
Key Metrics to Watch
- Net income growth trajectory to ensure profitability expansion matches revenue growth
- Gross margin sustainability amid competitive pressures in test equipment sector
- Free cash flow consistency and capital allocation decisions for shareholder returns
- Operating leverage improvement as company scales revenue base
- Customer concentration and geographic exposure in semiconductor industry demand cycles
TER Financial Metrics
TER Profitability Ratios
TER Balance Sheet & Liquidity
TER 5-Year Financial Trend
5-Year Trend Summary: TERADYNE, INC's revenue has declined by 14% over the 5-year period, indicating business contraction. The most recent EPS of $2.73 reflects profitable operations.
TER Growth Metrics (YoY)
TER Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $737.3M | $119.6M | $0.75 |
| Q2 2025 | $651.8M | $78.4M | $0.49 |
| Q1 2025 | $599.8M | $64.2M | $0.40 |
| Q3 2024 | $703.7M | $128.1M | $0.78 |
| Q2 2024 | $684.4M | $120.1M | $0.73 |
| Q1 2024 | $599.8M | $64.2M | $0.40 |
| Q3 2023 | $703.7M | $128.1M | $0.78 |
| Q2 2023 | $684.4M | $120.1M | $0.73 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
TER Capital Allocation
TER SEC Filings
Access official SEC EDGAR filings for TERADYNE, INC (CIK: 0000097210)