QS Research · Michael Burry's Scion Capital analyst template · 2006
TERADYNE, INC (TER)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -48% · downside -64% · upside 0%
Teradyne is a good cyclical franchise, but the price still capitalizes peak AI-test earnings: TTM EBITDA is $1.74B (N15) against a FY2020-FY2025 average of $905M (S2), and at today's own 19.3x EV/EBITDA (N29) the cycle-average base is about $114/share (-48%), trough EBITDA about $78 (-64%), and even TTM EBITDA only about $218 (0%). The market is not missing the AI upcycle; it is treating it as permanent. The short rule is met because base is below -30% and upside is below +25%, but conviction is medium because AI demand, record memory test revenue and net cash could extend the cycle. The catalysts are operating, not valuation: flat Q4 guidance, margin pressure and customer concentration.
Key numbers
- Share price: $218.22
- Market cap: $34.07B
- Latest financial period: TTM to Sep 27, 2026
- Revenue (TTM): $5.00B
- EV / EBITDA (TTM): 19.3x
- P/E (TTM): 24.8x
- Price / book: 9.24x
The 15 boxes
- ✓ 1. Long-form business notes
Teradyne is a concentrated, customer-concentrated supplier of automated test equipment plus a smaller robotics arm, now reported in three segments (Semiconductor Test, Robotics, Product Test) after the Product Test division was created effective March 2025; the FY2020 10-K still reported four segments (Semiconductor Test, System Test, Wireless Test, Industrial Automation). Across FY2020-FY2025 the P&L swings hard with the cycle: revenue $3.12B, $3.70B, $3.16B, $2.68B, $2.82B, $3.19B and operating income $928.4M, $1.20B, $831.9M, $501.1M, $593.8M, $650.1M (XBRL, FY2020-FY2025). The current cycle's driver is stated as AI-related semiconductor test demand, which the FY2025 10-K says drove the majority of revenue in the second half of 2025, with five largest direct customers at 44% of FY2025 revenue.
- ✓ 2. Competitive advantage
Teradyne's six-year record shows a genuinely sticky gross margin — 57% to 60% of revenue every year from FY2020 to FY2025 — but only middling pricing power below that line, with operating margin swinging from 32% (FY2021) to 19% (FY2023) on a 28% revenue drop and recovering only to 20% in FY2025. Management itself concedes rivals' products may be 'equal or superior' and that it does not consider any single piece of IP essential, while customer concentration rose (top five = 44% of FY2025 revenue vs 32% in FY2023). So: a cost/execution advantage and a cash-generative franchise through the cycle, not a demonstrable durable moat.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue was $1,306.0 million versus $769.2 million in Q3 2025, led by Semiconductor Test at $1,072.0 million, and gross margin was 59.1% versus 58.4%. Nine months to Sep 2026 operating cash flow was $1,047.9 million, and cash, cash equivalents and marketable securities were $624.9 million at Sep 27, 2026. Q4 2026 guidance is $1,250 million to $1,350 million of revenue and $1.88 to $2.18 GAAP diluted EPS; the 10-Q says FY2025 10-K risk factors remain applicable.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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