Today we're going to take a look at the well-established Teradyne, Inc. (NASDAQ:TER). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Teradyne’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Teradyne still cheap?
Good news, investors! Teradyne is still a bargain right now. According to my valuation, the intrinsic value for the stock is $182.68, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Teradyne’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Teradyne?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Teradyne, it is expected to deliver a relatively unexciting earnings growth of 4.3%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Teradyne, at least in the near term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since TER is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on TER for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TER. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 1 warning sign for Teradyne you should be aware of.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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