TER
Teradyne, Inc.
$340.61
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 111.6% above fair value
You pay
$340.61
Bear
$120.60
Fair
$160.97
Bull
$201.31
Bear
$120.60
-64.6%
$3.61 × 12x + net cash
Fair
$160.97
-52.7%
$3.61 × 16x + net cash
Bull
$201.31
-40.9%
$3.61 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.61)
Implied Market Multiple
94.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $402.30 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $160.97 per share.
Warnings
Price-to-book value of 24.0x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $402.30 (from 31 analysts). Our estimate is 86% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing