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Teradyne (TER): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q3 2026, to Sep 27, 2026, filed Oct 30, 2026; rules v1.1
Teradyne (TER): 1 rule of 10 triggered on the filings to Sep 27, 2026: receivables growing = future cash is certain. 2 to review; 2 with insufficient data; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Receivables growing = future cash is certain Triggered · severity medium · confidence medium
Receivables grew 87% year over year in Q3 2026 against revenue growth of 70%, and the quarter before 156% against 104%; days sales outstanding is 77 against a median of 61 over the eight quarters before. More of each quarter's revenue is still owed by customers.
Innocent reading: Seasonality: a quarter that always ends with big shipments.
Low P/E at a cyclical peak = undervalued To review · confidence medium
Net income of $1.4B is at a high against a median of $554M over eight years; at 24.9× the market is not pricing it as cheap, but a multiple on this year's profit still understates the mid-cycle one (61.6×).
A precise DCF value = the true value To review · confidence high
The DCF's point value is 217.46 a share (price 216.85); 73% of it is the terminal value, a number about years no one has seen. Moving revenue growth (each year) by ±5 pts alone takes it from 182.26 to 258.40; across every method the research ran the range is 48 to 878. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Not triggered confidence high
Free cash flow did not rise ($474M → $450M): the trap does not arise.
The figures and how they are read
| Fiscal year before | FY2024 |
| Fiscal year | FY2025 |
| Operating cash flow, year before | $672M |
| Operating cash flow | $674M |
| Capex, year before | $198M |
| Capex | $224M |
| Free cash flow, year before | $474M |
| Free cash flow | $450M |
| Change in FCF | −$24M |
| Change in capex | $26M |
| Working capital: change in its cash contribution | −$94M |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY2025 (cash flow statement, fiscal year) · FY2024 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 2.0% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY2025 |
| Stock compensation | $64M |
| Revenue | $3.2B |
| SBC / revenue | +2.0% |
| Buybacks | $702M |
| Buybacks / SBC | 11.0 |
| Diluted shares, year before | 163.3M shares |
| Diluted shares | 159.7M shares |
| Diluted shares: change | -2.2% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY2025 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Triggered severity medium · confidence medium
Receivables grew 87% year over year in Q3 2026 against revenue growth of 70%, and the quarter before 156% against 104%; days sales outstanding is 77 against a median of 61 over the eight quarters before. More of each quarter's revenue is still owed by customers.
The figures and how they are read
| Quarter | Q3 2026 |
| Revenue, year over year | +69.8% |
| Receivables, year over year | +87.1% |
| Quarter before | Q2 2026 |
| Revenue y/y, quarter before | +103.9% |
| Receivables y/y, quarter before | +156.3% |
| Days sales outstanding | 77.4 |
| DSO, median of eight quarters | 60.7 |
| Receivables | $1.1B |
| Revenue | $1.3B |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q3 2026 (receivables and revenue) · Q3 2025 (the same quarter a year earlier)
What would explain it innocently
- Seasonality: a quarter that always ends with big shipments
- An acquisition brought its own receivables
- New business with longer standard terms (government, large enterprise)
- Currency: receivables booked in a strengthening currency
What to look for in the filing
- The receivables ageing and the allowance for credit losses
- Any factoring or receivables sold (and whether with recourse)
- Credit terms by customer group
What would show the trap does not apply
- Receivables fall back in line with revenue in the next quarter and DSO returns to its history
- The 10-Q attributes the increase to a disclosed one-off (a large customer's timing, an acquisition) and the allowance for doubtful accounts did not rise
Look again: next filing.
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Insufficient data
no debt figure could be read from the balance sheet (the filing may tag it in other lines)
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 189% and net income rose 186% in Q3 2026; the share count fell 1.0%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q3 2026 |
| Quarter before | Q3 2025 |
| EPS, year before | $0.75 |
| EPS | $2.17 |
| Net income, year before | $120M |
| Net income | $342M |
| Diluted shares, year before | 159.1M shares |
| Diluted shares | 157.5M shares |
| EPS growth | +189.5% |
| Net income growth | +186.4% |
| Diluted shares: change | -1.0% |
| eps from profit | $1.40 |
| eps from share count | $0.02 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q3 2026 (net income, diluted shares, EPS) · Q3 2025 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued To review confidence medium
Net income of $1.4B is at a high against a median of $554M over eight years; at 24.9× the market is not pricing it as cheap, but a multiple on this year's profit still understates the mid-cycle one (61.6×).
The figures and how they are read
| market value | $34.2B |
| net income ttm | $1.4B |
| pe ttm | 24.90 |
| net income median fy | $554M |
| pe mid cycle | 61.60 |
| net income peak fy | $1.0B |
| years | FY2018 / 452.0; FY2019 / 467.0; FY2020 / 784.0; FY2021 / 1015.0; FY2022 / 716.0; FY2023 / 449.0; FY2024 / 542.0; FY2025 / 554.0 |
| down years in window | 2 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q3 2026 (net income, trailing twelve months)
What would show the trap does not apply
- Profit holds at this level through the next two years (the eight-year peak was a new base, not a top)
- The industry's capacity and prices stay where they are rather than reverting
Look again: next filing.
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 217.46 a share (price 216.85); 73% of it is the terminal value, a number about years no one has seen. Moving revenue growth (each year) by ±5 pts alone takes it from 182.26 to 258.40; across every method the research ran the range is 48 to 878. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 217.46 |
| price | 216.85 |
| terminal value share | +72.7% |
| swing by input | Revenue growth (each year) / ±5 pts / 182.26 / 258.4; WACC / ±1 pt / 194.31 / 246.38; Operating margin / ±3 pts / 196.4 / 238.53; Tax rate / ±5 pts / 204.41 / 230.51 |
| range all methods | 47.69; 878.06 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Teradyne: cash flow → Earnings quality score →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.