Yahoo Finance Teledyne's (NYSE:TDY) Q2: Beats On Revenue
Digital imaging and instrumentation provider Teledyne (NYSE:TDY) reported Q2 CY2024 results topping analysts' expectations , with revenue down 3.6% year on year to $1.37 billion. It made a non-GAAP profit of $4.58 per share, down from its profit of $4.67 per share in the same quarter last year.
Is now the time to buy Teledyne? Find out in our full research report.
Teledyne (TDY) Q2 CY2024 Highlights:
Revenue: $1.37 billion vs analyst estimates of $1.36 billion (1.1% beat)
EPS (non-GAAP): $4.58 vs analyst estimates of $4.50 (1.9% beat)
EPS (non-GAAP) Guidance for Q3 CY2024 is $4.95 at the midpoint, below analyst estimates of $5.01
Gross Margin (GAAP): 43.1%, in line with the same quarter last year
Market Capitalization: $19.07 billion
"In the second quarter, Teledyne achieved all-time record free cash flow, allowing us to deploy approximately $852 million on debt repayment, acquisitions and stock repurchases through July,” said Robert Mehrabian, Executive Chairman.
Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE:TDY) offers digital imaging and instrumentation products for various industries.
Inspection Instruments
Measurement and inspection instrument companies may enjoy more steady demand because products such as water meters are non-discretionary and mandated for replacement at predictable intervals. In the last decade, digitization and data collection have driven innovation in the space, leading to incremental sales. But like the broader industrials sector, measurement and inspection instrument companies are at the whim of economic cycles. Interest rates, for example, can greatly impact civil, commercial, and residential construction projects that drive demand.
Sales Growth
A company's long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Thankfully, Teledyne's 13.1% annualized revenue growth over the last five years was excellent. This shows it expanded quickly, a useful starting point for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Teledyne's recent history shows its demand slowed significantly as its annualized revenue growth of 1.7% over the last two years is well below its five-year trend.
This quarter, Teledyne's revenue fell 3.6% year on year to $1.37 billion but beat Wall Street's estimates by 1.1%. Looking ahead, Wall Street expects sales to grow 4.1% over the next 12 months, an acceleration from this quarter.
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Operating Margin
Read More Operating margin is an important measure of profitability. It’s the portion of revenue left after accounting for all core expenses–everything from the cost of goods sold to advertising and wages. Operating margin is also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Teledyne has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.6%. This isn't surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Teledyne's annual operating margin rose by 3.3 percentage points over the last five years, showing its efficiency has improved.
This quarter, Teledyne generated an operating profit margin of 18%, in line with the same quarter last year. This indicates the company's cost structure has recently been stable.
EPS
Read MoreWe track the long-term growth in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth was profitable.
Teledyne's EPS grew at a spectacular 15.1% compounded annual growth rate over the last five years, higher than its 13.1% annualized revenue growth. This tells us the company became more profitable as it expanded.
Diving into the nuances of Teledyne's earnings can give us a better understanding of its performance. As we mentioned earlier, Teledyne's operating margin was flat this quarter but expanded by 3.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals.
Like with revenue, we also analyze EPS over a more recent period because it can give insight into an emerging theme or development for the business. For Teledyne, its two-year annual EPS growth of 5.6% was lower than its five-year trend. We hope its growth can accelerate in the future.
In Q2, Teledyne reported EPS at $4.58, down from $4.67 in the same quarter last year. Despite falling year on year, this print beat analysts' estimates by 1.9%. Over the next 12 months, Wall Street expects Teledyne to grow its earnings. Analysts are projecting its EPS of $19.62 in the last year to climb by 2.8% to $20.17.
Key Takeaways from Teledyne's Q2 Results
It was good to see Teledyne beat analysts' revenue and EPS expectations this quarter. However, EPS guidance for next quarter was below expectations. Zooming out, we think this was a mixed quarter. The stock remained flat at $405 immediately after reporting.
So should you invest in Teledyne right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
