Why Teradyne (TER) Stock Is Falling Today

NEW YORK (TheStreet) -- Teradyne (TER) was falling -4.7% to $17.39 Friday after issuing a second quarter guidance that falls below analysts' expectations for earnings.

In its second quarter guidance Teradyne said it expects earnings of between 36 cents and 43 cents a share. Analysts surveyed by Thomson Reuters expect earnings of 49 cents a share for the quarter, 6 cents higher than the high-end of the company's guidance.

Though its guidance falls below estimates for the second quarter, Teradyne beat analysts' estimates in the first quarter. In the first quarter Teradyne reported earnings of 11 cents a share, beating estimates of 6 cents a share by 5 cents. Revenue grew 14.5% to $321 million in the quarter, beating estimates of $614.57 million.

Must read: Warren Buffett's 10 Favorite Growth Stocks

SELL NOW: If you own any of the 900 stocks that TheStreet Quant Ratings has identified as a 'Sell'...you could potentially lose EVERYTHING in the next 6-12 months. Learn more.

TheStreet Ratings team rates TERADYNE INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TERADYNE INC (TER) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 14.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TER's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TER has a quick ratio of 2.28, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 235.1% when compared to the same quarter one year prior, rising from -$16.54 million to $22.34 million.
  • Net operating cash flow has slightly increased to $43.85 million or 3.65% when compared to the same quarter last year. In addition, TERADYNE INC has also vastly surpassed the industry average cash flow growth rate of -71.56%.
  • You can view the full analysis from the report here: TER Ratings Report

STOCKS TO BUY: TheStreet's Stocks Under $10 has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

If you liked this article you might like

Times Are Still Very Good for Chip Equipment Makers

Times Are Still Very Good for Chip Equipment Makers

Times Are Still Very Good for Chip Equipment Makers

Times Are Still Very Good for Chip Equipment Makers

There Is Good and a Lot of Bad in General Electric Earnings

There Is Good and a Lot of Bad in General Electric Earnings

Splunk, Southern Company, LAM Research: 'Mad Money' Lightning Round

Splunk, Southern Company, LAM Research: 'Mad Money' Lightning Round

Don't Miss This Chance to Buy: Cramer's 'Mad Money' Recap (Monday 1/22/18)

Don't Miss This Chance to Buy: Cramer's 'Mad Money' Recap (Monday 1/22/18)