Some info from a S&P report on Teradyne dated 31 May, 1997:
i) Background: Teradyne is the world's largest manufacturer of automatic test equipment for the electronics industry. Products include (in decreasing order of % of sales): systems to test semiconductors, circuit boards and modules, telephone lines, and software. Teradyne also makes 'backpane' connection panels which aid in the integration of electronic systems. Paraphrasing S&P, the company is a leader in each of the markets it serves,
ii) Financial overview: On 29 April, 1997 S&P raised their revenue and EPS forecasts for TER based on a recent surge in orders. They foresee an ongoing increase in earnings through the end of 1997 and into 1998. While margins are likely to narrow slightly, operating expenses are expected to remain well under control. S&P is predicting an EPS of $1.40 for 1997 (1996 = $1.48 before charge) and $2.40 for 1998. At ~$40/share, TER is trading @ PE=~29 for their 1997 est. EPS and at PE=~17 for the estimated 1998 EPS.
iii) Valuation: S&P also upgraded their rating of TER on 29 April to 'accumulate' (4 stars of 5) based on their determination that a return to profitability is more imminent than previously anticipated. In addition to the rapid increase in orders, S&P noted that TER is not as effected by industry overcapacity as other semi. manufacturers.
They summarize by reiterating TER's leading position in the test equipment industry and indicate the shares are '..attractively valued for aggressive investors seeking capital gains.'
Best wishes,
Peter |
