TER
Teradyne, Inc.
$358.44
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 146.2% above fair value
You pay
$358.44
Bear
$109.09
Fair
$145.60
Bull
$182.09
Bear
$109.09
-69.6%
$3.61 × 12x + net cash
Fair
$145.60
-59.4%
$3.61 × 16x + net cash
Bull
$182.09
-49.2%
$3.61 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.61)
Implied Market Multiple
99.4x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $351.09 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $145.60 per share.
Warnings
Price-to-book value of 25.2x 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 $351.09 (from 31 analysts). Our estimate is 84% 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