TER

Teradyne Inc

Industrial/Transportation, TMT


Presented:08/06/2019
Price:$51.26
Cap:$8.79B
Current Price:$127.36
Cap:$20.78B

Presented

Date08/06/2019
Price$51.26
Market Cap$8.79B
Ent Value$8.09B
P/E Ratio19.8x
Book Value$8.53
Div Yield0.7%
Shares O/S171.40M
Ave Daily Vol2,358,071
Short Int5.27%

Current

Price$127.36
Market Cap$20.78B
Teradyne, Inc. supplies automation equipment for test and industrial applications. It operates through the following segments: Semiconductor Test, System Test, Wireless Test, and Industrial Automation. The Semiconductor Test segment designs, manufactures, sells, and supports semiconductor test products and services which are used both for wafer level and device package testing. The Systems Test segment comprises of defense and aerospace, storage test, and production board test business unit. The Wireless Test segment designs, develops, and supports advanced wireless test equipment for the manufacturing of wireless devices such as smart phones, tablets, notebooks, laptops, personal computer peripherals, and other Wi-Fi, bluetooth, near field communication and cellular enabled devices. The Industrial Automation segment supplies collaborative robots that work side by side with production workers. The company was founded by Alexander V. d'Arbeloff and Nicholas DeWolf on September 23, 1960 and is headquartered in North Reading, MA.

Publicly traded companies mentioned herein: Amazon Inc (AMZN), Ametek Inc (AME), Apple Inc (AAPL), Daimler AG (DAI), Fanuc Corporation (6954 JP), Lam Research Corporation (LRCX), Teradyne Inc (TER), Toyota Motor Corp (TM). 

Highlights

The presenter is short shares of Teradyne (TER) which are trading ~20x consensus earnings, believing the company is overvalued relative to comps which trade at 10-12x earnings. TER’s high multiple is predicated on a “false growth story” around industrial automation (~15-20% of its revenues), following two acquisitions in 2015 and 2018. “True organic growth” is coming from its semiconductor business which makes up ~85% of revenues; and while it’s been a historically “good” business with high returns on capital, growth has slowed down to MSD recently. He believes the recent short squeeze creates an opportunity given the persisting cyclical issues within the semiconductor industry, and expects TER shares to trade down to ~$35-38.

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