Teradyne Inc. is a leading supplier of automation solutions for test and industrial applications. Teradyne Automatic Test Equipment is used to test semiconductors, wireless products, data storage and complex electronic systems, which serve consumer, communications, industrial and government customers. The company was founded in 1960 and is based in North Reading, Massachusetts.
TER Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Teradyne Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Teradyne Inc ranked in the 25th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 62.83%. The most interesting components of our discounted cash flow analysis for Teradyne Inc ended up being:
The company's debt burden, as measured by earnings divided by interest payments, is 31.78 -- which is good for besting 85.71% of its peer stocks (US stocks in the Technology sector with positive cash flow).
The business' balance sheet suggests that 3% of the company's capital is sourced from debt; this is greater than only 10.46% of the free cash flow producing stocks we're observing.
TER's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 48.12% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
MTCH, VPG, DOCU, FARO, and FICO can be thought of as valuation peers to TER, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
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