Is Teradyne Inc (TER) overvalued?
On Equity Rank's model estimate, TER trades 29% above its fair value. Teradyne Inc (TER) last closed at $218.22; the multi-method model fair value is $169.56.
| Price | Model fair value | Price vs model |
|---|---|---|
| $218.22 | $169.56 | 29% above |
What the answer rests on
- 1 of 8 valuation methods put TER's value above its price and 7 put it below, so the methods mostly agree.
- To justify today's price, TER's free cash flow would need to grow about 31.2% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 2.8% a year.
- TER trades at 28.9 times its last year's earnings, against a median of 42.5 for 27 profitable Semiconductors companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 6% above to 140% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind TER's fair value · What prices assume · Other companies