Teradyne Inc (TER, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $115.28, Teradyne Inc has witnessed a daily gain of 1.01%, marked against a three-month change of 8.97%. A thorough analysis, underlined by the GF Score, suggests that Teradyne Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 10/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a lower GF Value rank, GuruFocus assigned Teradyne Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Teradyne Inc Business
Teradyne Inc, with a market cap of $17.63 billion and sales of $2.66 billion, operates within the semiconductor industry, providing essential testing equipment. The company boasts an operating margin of 19.17%, reflecting efficient management and strong profitability. Teradyne Inc's product portfolio includes automated test equipment for semiconductors, system testing for hard disk drives, circuit boards, and electronics systems, as well as wireless testing for devices. Since 2015, Teradyne Inc has expanded into the industrial automation market, offering collaborative and autonomous robots for factory applications. The company's significant exposure to semiconductor testing positions it well within the technology sector, catering to vertically integrated, fabless, and foundry chipmakers with its equipment.
Financial Strength Breakdown
According to the Financial Strength rating, Teradyne Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Teradyne Inc stands impressively at 180.72, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 14.08, Teradyne Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.03, Teradyne Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Teradyne Inc's impressive standing among its peers in generating profit. The company's strong Predictability Rank of 3.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence in its ability to maintain profitability over time.
Growth Rank Breakdown
Ranked highly in Growth, Teradyne Inc demonstrates a strong commitment to expanding its business. The company's strategic initiatives and investments in innovation have contributed to its impressive growth trajectory, as evidenced by its consistent revenue increase over the years.
Next Steps
Considering Teradyne Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking to capitalize on such robust financial health and market position should consider the insights provided by the GF Score. For those looking to explore further, GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
