QS Research · Michael Burry's Scion Capital analyst template · 2006
TERADYNE, INC (TER)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction high · base case -48% · downside -67% · upside -18%
On the FY2020-FY2025 cycle average, normalized EBITDA is $904M, EBIT $784M and FCF $569M, versus TTM EBITDA of $1.74B and FCF of $1.02B, so the $33.51B EV and 19.2x EV/EBITDA are capitalizing peak AI-cycle earnings (S2, N14, N18, N25, N27). At TER's own 19.2x on normalized EBITDA, 19.2 x $904M = $17.37B EV + $377.5M net cash = $17.74B equity / 156.12M shares = $113.6, -47.8% from $217.60; the 12.0x downside is $71.9 (-67.0%) and the 30.3x KEYS upside is $178.0 (-18.2%). The balance sheet is net cash ($460.7M cash, no debt, $83.2M leases) and buybacks are real ($356.9M TTM), but they do not bridge a valuation that needs TTM EBITDA to be durable. I would short; the market is treating an AI-concentrated, 44%-top-five-customer cycle as a new permanent base.
Key numbers
- Share price: $217.60
- Market cap: $33.97B
- Latest financial period: TTM to Sep 27, 2026
- Revenue (TTM): $5.00B
- EV / EBITDA (TTM): 19.2x
- P/E (TTM): 24.7x
- Price / book: 9.21x
The 15 boxes
- ✓ 1. Long-form business notes
Teradyne sells automated test equipment (Semiconductor Test, Product Test) and collaborative robots (Robotics), with revenue of $3.19B in FY2025 versus a FY2022 peak of $3.16B... precisely: $3.70B in FY2021, troughing at $2.68B in FY2023 and recovering to $2.82B (FY2024) and $3.19B (FY2025), with operating income following the same arc ($1.20B FY2021 → $501.1M FY2023 → $650.1M FY2025). Between the FY2020 10-K and the FY2025 10-K the reporting structure was recut: System Test, Wireless Test and Industrial Automation disappeared, replaced by Semiconductor Test, Robotics and a new Product Test segment effective March 2025. The FY2025 upcycle is explicitly AI-driven and highly customer-concentrated (top five direct customers 44% of FY2025 revenue), with 89% of revenue booked outside the U.S.
- ✓ 2. Competitive advantage
Teradyne has a real but contestable advantage in test: gross margin sat between 57.4% and 59.7% every year FY2020-FY2025 even as revenue swung from $3.70B (FY2021) down to $2.68B (FY2023) and back to $3.19B (FY2025), which says pricing on the cost of goods held through the cycle. Below the gross line there is no protection: operating margin ranged from 32.4% (FY2021) to 18.7% (FY2023), top-five customers were 44% of FY2025 revenue, and management names Advantest in Semiconductor Test while conceding competition comes from customers' own internal supply. The company itself says no single piece of IP is essential, so this is an engineering/scale position, not a license or network moat.
- ✓ 3. 10-Q takeaways
Q3 2026 showed a sharp AI-driven upcycle: revenue was $1,306.0 million versus $769.2 million in Q3 2025, gross margin 59.1%, and income from operations 31% of revenue, led by Semiconductor Test at $1,072.0 million. Nine-month 2026 operating cash flow was $1,047.9 million, funding $173.5 million of buybacks and $61.0 million of dividends while cash and marketable securities rose to $624.9 million and short-term debt fell to zero. Management gave no numeric guidance, only a 2027 growth/reinvestment outlook, and disclosed a $300.0 million FormFactor minority investment; the risk-factor update adds no new factors beyond the 2025 10-K.
- ✓ 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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