TER
Teradyne, Inc.
$325.00
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 463.3% above fair value
You pay
$325.00
Bear
$43.27
Fair
$57.70
Bull
$72.12
Bear
$43.27
-86.7%
$3.61 × 12x
Fair
$57.70
-82.2%
$3.61 × 16x
Bull
$72.12
-77.8%
$3.61 × 20x
Adjust Assumptions
16.0x
3.61$
Key Value Driver
Through-cycle normalized EPS ($3.61)
Implied Market Multiple
90.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$461.50
Divergence from AlphaVal
87%
Summary
Using 7-year normalized EPS of $3.61 at a 16x cycle multiple, the base-case value is $57.70 per share. P/TBV cross-check: 22.9x.
Warnings
Price-to-book value of 22.9x 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 $461.50 (from 31 analysts). Our estimate is 87% 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