Value
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.6 |
| P/S | 0.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.9 |
| PEG | 4.8 |
| Analyst target | 5.0 |
- ▸Forward P/E: 37.5x
- ▸PEG: 1.69
- ▸Expensive valuation
TER · Why this verdict
Why Teradyne (TER) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue grew 87% year-over-year, placing Teradyne as an industry growth leader in semiconductor equipment — a rate that reflects either significant market share gains, end-market demand recovery, or both, and positions the company in the top percentile of peers on the growth dimension. Growth breakdown | Revenue growth stays above 30% year-over-year in at least 2 of the next 4 quarters as the semiconductor equipment cycle sustains elevated demand. | →Stable |
| Counter87% revenue growth in semiconductor equipment is highly cyclical and driven by the current AI-infrastructure spending wave; the geographic concentration of 89% of revenues outside the United States creates tariff, currency, and geopolitical risk to future quarters. | ||
89% of Teradyne's revenues are generated outside the United States, representing the highest geographic concentration risk in this set — creating significant exposure to export controls, tariff regimes, and geopolitical disruption in Asia-Pacific semiconductor supply chains. Bear case | Revenue from regions outside the United States remains stable with no quarter showing a year-over-year decline of more than 10% due to export restrictions or tariff disruption. | →Stable |
| CounterGlobal semiconductor equipment markets are inherently international; Teradyne's geographic footprint reflects its customer base in leading-edge chip manufacturing in Taiwan, South Korea, and Japan rather than a structural vulnerability. | ||
Teradyne earns a wide economic moat designation, achieves 29% return on equity, earns 23% net margins, and holds a Piotroski financial health score of 7 out of 9 — a combination that qualifies it as compounder-quality with durable competitive advantages in semiconductor test equipment. Quality breakdown | Return on equity stays above 20% and net margins remain above 18% over the next four reported quarters. | →Stable |
| CounterFree cash flow represents only 35% of net income — flagged as a red flag for earnings quality — meaning the high GAAP margins are not fully converting to cash, which raises questions about working capital, inventory, or capital expenditure requirements for this equipment cycle. | ||
At $432 per share and a forward price-to-earnings of 45.5 times, Teradyne is trading approximately 22% above the analyst consensus price target — the negative asymmetry ratio of negative 1.5 indicates the current price already exceeds what fundamental analysis justifies at current earnings estimates. Targets | Analyst consensus target rises above $500, more than 16% above the current $432.41 price, following continued strong earnings delivery and sustained semiconductor equipment demand. | →Stable |
| CounterMarket leaders in high-barrier semiconductor equipment markets can sustain premium valuations for extended periods when structural demand drivers — such as AI chip scaling — create multi-year investment cycles; a 45.5 times forward price-to-earnings may prove reasonable if earnings power continues to expand. | ||
Revenue grew 87% year-over-year, placing Teradyne as an industry growth leader in semiconductor equipment — a rate that reflects either significant market share gains, end-market demand recovery, or both, and positions the company in the top percentile of peers on the growth dimension.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 30% year-over-year in at least 2 of the next 4 quarters as the semiconductor equipment cycle sustains elevated demand.
Counter87% revenue growth in semiconductor equipment is highly cyclical and driven by the current AI-infrastructure spending wave; the geographic concentration of 89% of revenues outside the United States creates tariff, currency, and geopolitical risk to future quarters.
89% of Teradyne's revenues are generated outside the United States, representing the highest geographic concentration risk in this set — creating significant exposure to export controls, tariff regimes, and geopolitical disruption in Asia-Pacific semiconductor supply chains.
→StableBear case
- Expectation
- Revenue from regions outside the United States remains stable with no quarter showing a year-over-year decline of more than 10% due to export restrictions or tariff disruption.
CounterGlobal semiconductor equipment markets are inherently international; Teradyne's geographic footprint reflects its customer base in leading-edge chip manufacturing in Taiwan, South Korea, and Japan rather than a structural vulnerability.
Teradyne earns a wide economic moat designation, achieves 29% return on equity, earns 23% net margins, and holds a Piotroski financial health score of 7 out of 9 — a combination that qualifies it as compounder-quality with durable competitive advantages in semiconductor test equipment.
→StableQuality breakdown
- Expectation
- Return on equity stays above 20% and net margins remain above 18% over the next four reported quarters.
CounterFree cash flow represents only 35% of net income — flagged as a red flag for earnings quality — meaning the high GAAP margins are not fully converting to cash, which raises questions about working capital, inventory, or capital expenditure requirements for this equipment cycle.
At $432 per share and a forward price-to-earnings of 45.5 times, Teradyne is trading approximately 22% above the analyst consensus price target — the negative asymmetry ratio of negative 1.5 indicates the current price already exceeds what fundamental analysis justifies at current earnings estimates.
→StableTargets
- Expectation
- Analyst consensus target rises above $500, more than 16% above the current $432.41 price, following continued strong earnings delivery and sustained semiconductor equipment demand.
CounterMarket leaders in high-barrier semiconductor equipment markets can sustain premium valuations for extended periods when structural demand drivers — such as AI chip scaling — create multi-year investment cycles; a 45.5 times forward price-to-earnings may prove reasonable if earnings power continues to expand.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Teradyne has achieved 87% revenue growth year-over-year, holds a wide economic moat with a Piotroski financial health score of 7 out of 9 and 29% return on equity, and receives strongly positive news sentiment — but at $432 per share the stock trades 22% above the analyst consensus target with a forward price-to-earnings of 45.5 times, and free cash flow represents only 35% of net income.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.6 |
| ROA | 10.0 |
| Gross margin | 7.7 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 7.4 |
| FCF quality | 2.8 |
| Moat | 7.5 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 29%
- ▸Strong margins: 23%
- ▸Earnings quality RED FLAG: 35% FCF/NI
- ▸Wide economic moat
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 87% YoY
Momentum
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 3.6 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.0 |
| Analyst rating | 7.4 |
| Price target | 6.8 |
- ▸LLM news sentiment: +0.60 (n=6)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $6,625,278 (0.011% of mkt cap)
Peer rank
6.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.6 |
| quality rank | 7.8 |
| growth rank | 9.6 |
- ▸Industry growth leader
Technical
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.9 |
| support resistance | 8.1 |
| 52w position | 5.1 |
Risk (lower is worse)
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 8.5 |
| volatility | 0.0 |
| put call | 1.5 |
| implied vol | 0.0 |
| beta | 4.0 |
| debt equity | 2.4 |
- ▸Elevated put/call: 1.77
- ▸High IV: 114%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 14.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:26d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.8<4.5
- ASYMMETRY:0.1<1.5@spot
Warning (0)
none
Reward-to-Risk
0.11
Upside
+1.6%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeTemporary headwind — High quality (8.1) with weak momentum (2.8)
SuitabilityAggressive — Beta 1.79>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 10.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.8<4.5, ASYMMETRY:0.1<1.5@spot) reinforce the read. Current asymmetry R:R is 0.11 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 10.0, Quality at 8.1, and Sentiment at 7.4; the weakest are Momentum at 2.8, Value at 2.8, and Risk (lower is worse) at 3.3. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.11 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat High Quality Platform
Trip ifReturn on equity drops below 15% in any reported quarter, more than 14 percentage points below the current 29% level.
- P2Exceptional Revenue Growth
Trip ifRevenue growth falls below 20% year-over-year in any reported quarter, more than 67 percentage points below the current 87% rate.
- P3Premium Valuation Above Analyst Target
Trip ifStock price rises above $500, more than 15% above the current $432.41, without analyst consensus targets rising above $520.
- P4Geographic Revenue Concentration
Trip ifRevenue from outside the United States declines by more than 15% year-over-year in any quarter due to export restrictions or geopolitical disruption.