Morningstar

Teradyne Inc TER

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Stock XNAS Rating as of
$130.50 +1.49 (1.15%)
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As of Delayed Price Closed

Company Report

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Teradyne Holds a Wide Moat in Chip Testing and Is Dealing With Cyclically Soft Demand

William Kerwin

Teradyne is a heavyweight supplier of automated test equipment for semiconductors, boasting market-leading capabilities that run the gamut of chips. It is one of two companies worldwide that can produce testers for the most cutting-edge semiconductors, thanks to robust engineering talent across hardware and software and a structural lead in organic investment. The firm is a vital partner to chipmakers across the industry and has an impressively strong relationship with Apple and Taiwan Semiconductor. Teradyne’s market leadership exhibits itself in industry-leading margins, strong returns on invested capital, and a top market share. We give the firm a wide economic moat rating.

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Price vs Fair Value

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TER is trading at a 120% premium.
Price
$130.50
Fair Value
$289.00
Uncertainty
High
1-Star Price
$712.14
5-Star Price
$21.00
Economic Moat
Vvtk
Capital Allocation
Jnzycsy

Bulls Say, Bears Say

Bulls

We think Teradyne’s depth, breadth, and steep investment in chip testing capabilities form structural competitive advantages that would be extremely difficult to replicate.

Bears

We expect continued head-to-head competition with Advantest to be a headwind to Teradyne’s growth and profitability.

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News

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Trading Information

Previous Close Price
$129.01
Day Range
$129.25–132.28
52-Week Range
$81.08–163.21
Bid/Ask
$129.71 / $131.07
Market Cap
$21.29 Bil
Volume/Avg
1.2 Mil / 2.0 Mil

Key Statistics

Price/Earnings (Normalized)
44.09
Price/Sales
7.87
Dividend Yield (Trailing)
0.36%
Dividend Yield (Forward)
0.37%
Total Yield
1.30%

Company Profile

Teradyne provides testing equipment, including automated test equipment for semiconductors, system testing for hard disk drives, circuit boards, and electronics systems and wireless testing for devices. The firm entered the industrial automation market in 2015, into which it sells collaborative and autonomous robots for factory applications. Teradyne serves numerous end markets and geographies directly and indirectly with its products, but its most significant exposure is to semiconductor testing. Teradyne serves vertically integrated, fabless, and foundry chipmakers with its equipment.
Sector
Technology
Industry
Semiconductor Equipment & Materials
Stock Style Box
Mid Core
Total Number of Employees
6,500
Website
https://www.teradyne.com

Competitors

Valuation

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Metric
TER
AMAT
KLAC
Price/Earnings (Normalized)
 44.0923.8733.14
Price/Book Value
 7.738.8431.42
Price/Sales
 7.876.2910.93
Price/Cash Flow
 35.8121.4530.55
Price/Earnings
TER
AMAT
KLAC

Financial Strength

Metric
TER
AMAT
KLAC
Quick Ratio
 1.491.951.40
Current Ratio
 2.802.862.15
Interest Coverage
 138.7232.6010.73
Quick Ratio
TER
AMAT
KLAC

Profitability

Metric
TER
AMAT
KLAC
Return on Assets (Normalized)
 13.91%22.36%22.18%
Return on Equity (Normalized)
 18.96%41.20%104.87%
Return on Invested Capital (Normalized)
 17.42%27.93%35.58%
Return on Assets
TER
AMAT
KLAC

Semiconductor Equipment & Materials Industry Comparables

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Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
ASML Holding NV
ASMLF
LknnqwqbJbvv$328.7 Bil
 ASML Holding NV ADR
ASML
RcympbsryBtv$328.7 Bil
 Applied Materials Inc
AMAT
HxmwlylmlKtvj$166.5 Bil
 Lam Research Corp
LRCX
RztxvzsxdTsbkv$105.7 Bil
 KLA Corp
KLAC
QdbfrvcpzqBvpxf$105.5 Bil
 Tokyo Electron Ltd
TOELF
—Mmyjdxq$79.6 Bil
 Tokyo Electron Ltd ADR
TOELY
—Wbgdgg$79.6 Bil
 Advantest Corp ADR
ATEYY
—Tbmtwj$35.1 Bil
 Advantest Corp
ADTTF
—Xfjqmst$35.1 Bil

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