The data analytics industry is growing rapidly, fueled by the widespread adoption of big data and predictive analytics. Sectors like finance, healthcare, and transportation are increasingly relying on analytics tools for applications such as market forecasting, research insights, and traffic trend predictions, gaining a competitive edge in the market.

According to a study by Fortune Business Highlights, the data analytics market size is expected to reach $279.31 billion by 2030, growing at an impressive CAGR of 27.3%. This growth is a testament to the increasing popularity of the market as more and more businesses are keen to target and forecast their products to meet their needs.

Amid this growth, Teradata Corporation (TDC) stands out as a key player in the data analytics market. With strategic partnerships in the pipeline and innovative AI-driven solutions, TDC is enhancing its contributions to the analytics space. Its shares have surged 3.6% over the past three months, closing the last trading session at $31.29.

Now, let us delve deeper into the factors that could shape TDC’s performance in the near future.

Recent Developments

On December 3, 2024, TDC announced a partnership with Amazon Web Services (AWS) to deliver ‘rapid-start’ Gen AI use cases when leveraging Teradata VantageCloud on AWS, integrated with Amazon Bedrock.

The partnership allows TDC’s VantageCloud’s open and connected framework to utilize Amazon Bedrock’s capabilities to quickly adopt the latest Gen AI innovations for enterprises and strengthen the company’s market presence in the AI market.

On November 19, 2024, TDC announced the availability of its Teradata AI Unlimited for public preview through the Microsoft Fabric Workload Hub. This allows users to trial the solution directly from the Fabric Workload Hub, applying analytic functions without affecting their production Teradata ecosystem.

As AI continues to drive advancements in data science, development, and analytics, this move could strengthen the company’s position in these industries.

Sound Historical Growth

Over the past five years, TDC has demonstrated consistent growth across key financial metrics. Its EBITDA grew at a CAGR of 13.1%. Moreover, operational income (EBIT) expanded at a CAGR of 26.3%. Additionally, TDC’s net income and EPS grew at a CAGR of 42.4% and 47.3%, respectively.

Strong Financials

For the fiscal 2024 third quarter that ended September 30, TDC’s total revenue marginally increased year-over-year to $440 million. Its non-GAAP operating income grew 57.1% from the prior year’s quarter to $99 million.

Moreover, the company’s non-GAAP net income and non-GAAP EPS rose 55.8% and 64.3% year-over-year to $67 million and $0.69, respectively.

Mixed Analyst Estimates

Analysts predict TDC’s revenue for the fiscal year that ended December 2024 to decrease 4.1% year-over-year to $1.76 billion. Its EPS for the same period is expected to increase 12.8% year-over-year to $2.33. Plus, the company exceeded the consensus EPS estimates in each of the four trailing quarters, which is impressive.

For the fiscal year ending December 2025, TDC’s revenue is expected to decrease 3.6% from the prior year to $1.69 billion, while its EPS is forecasted to rise 5.6% year-over-year to $2.47.

High Profitability

TDC’s trailing-12-month gross profit margin of 60.96% is 19.5% higher than the industry average of 51.01%. Its trailing-12-month EBITDA margin stands at 17.52%, 68.2% higher than the industry average of 10.42%.

In addition, the company boasts a trailing-12-month net income margin of 4.56%, which is 18.8% higher than the sector average of 3.84%. Also, the stock’s trailing-12-month levered FCF margin of 18.95% outperforms the industry average of 11.35% by 67%.

Discounted Valuation

TDC is currently trading at a forward non-GAAP P/E of 13.40x, which is 47.3% lower than the industry average of 25.44x. Moreover, the stock’s forward EV/EBIT multiple stands at 9.17, 58.5% lower than the industry average of 22.07x.

Additionally, it has a forward Price/Sales multiple of 1.70, which is 48.4% lower than the industry average of 3.30x. This indicates that TDC is undervalued compared to the broader market, offering potential upside for investors.

POWR Ratings Reflects Optimism

TDC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

TDC has an A grade for Quality, supported by profitability measures that exceed industry benchmarks. Moreover, it earns an A grade for Value, driven by its discounted valuation metrics relative to the industry average.

The stock also holds an A grade for Growth, which is in line with its impressive historical growth. TDC has topped the 78-stock Technology – Services industry.

Beyond what is stated above, we have also given TDC grades for Sentiment, Momentum, and Stability. Get all TDC ratings here.

Bottom Line

TDC has emerged as a prominent player in the data analytics market, fueled by its long portfolio of partnerships with industry giants, as well as its innovative AI-driven solutions. With the data analytics market on an upward trend, the company’s prospects seem bright for the near future as well.

Considering TDC’s high profitability, strong financials, lower valuation, and strategic market position, now might be the ideal time to consider adding TDC to one’s investment portfolio.

How Does Teradata Corporation (TDC) Stack Up Against Its Peers?

Although TDC’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who also exhibit strong POWR Ratings. So, consider these A (Strong Buy) rated stocks from the Technology – Services industry:

Leidos Holdings Inc. (LDOS)

N-able Inc. (NABL)

NetScout Systems, Inc. (NTCT)

To explore more A or B-rated Technology – Services stocks, click here.

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TDC shares were unchanged in premarket trading Wednesday. Year-to-date, TDC has gained 0.45%, versus a 0.44% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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