Teradyne (TER) Q3 Earnings & Revenues Top Estimates, Up Y/Y

Teradyne TER reported third-quarter 2021 earnings of $1.59 per share, which surpassed the Zacks Consensus Estimate by 9.7% and increased 34.7% year over year.

Revenues of $951 million also surpassed the Zacks Consensus Estimate of $941.3 million. Further, the figure increased 16% year over year. Higher demand for both Test and Industrial Automation (“IA”) products drove top-line growth for the reported quarter.

Quarter Details

Revenues from Semiconductor Test platforms, System Test business, IA, and Wireless Test business were $688 million, $103 million, $91 million, and $69 million, respectively.

Test revenues were driven by strength in Semiconductor Test and Wireless Test. Also, IA revenues increased because Universal Robots globally delivered high growth.

Test shipments remained high for the reported quarter. But, shipments from the IA business were low owing to supply constraints in the product lines.

Teradyne, Inc. Price, Consensus and EPS Surprise

Teradyne, Inc. price-consensus-eps-surprise-chart | Teradyne, Inc. Quote

Non-GAAP gross margin was 60.1%, expanding 407 basis points (bps) year over year.

GAAP operating expenses increased 31.4% year over year to $248.6 million. As a percentage of revenues, GAAP operating expenses increased 306 bps year over year to 26.2%.

Selling and administrative (S&A) expenses grew 16.4% year over year to $134.8 million. Engineering and development (E&D) increased 12.97% year over year to $107.2 million. S&A expenses expanded 5 bps while E&D expenses contracted 30 bps as a percentage of revenues.

Acquired intangible assets amortization (AIAA) expenses declined 13.9% year over year to $5.4 million. As a percentage of revenues, AIAA expenses contracted 20 bps year over year.

Consequently, non-GAAP operating margin was 33.9%, which expanded 101 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Oct 3, 2021, Teradyne’s cash and cash equivalents (including marketable securities) were $1.31 billion, higher than $1.24 billion as of Jul 4, 2021.

Net cash provided by operating activities was $522.7 million for the third quarter versus $206.3 million in the prior quarter.

Guidance

For the fourth quarter of 2021, Teradyne expects revenues between $820 million and $900 million. The Zacks Consensus Estimate for the same is pegged at $820.3 million.

Growing demand in Industrial/Automotive Test, Storage Test, and Industrial Automation is a major tailwind.

Non-GAAP earnings are expected between $1.14 and $1.40 per share for fourth-quarter 2021. The consensus mark for the same is $1.19 per share.

Zacks Rank & Other Stocks to Consider

Currently, Teradyne carries a Zacks Rank #2 (Buy).

Other similar-ranked stocks in the broader technology sector include Semtech Corporation SMTC, Apple AAPL and Trimble TRMB. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for Semtech, Apple, and Trimble are currently projected at 12.5%, 12.5%, and 10%, respectively.