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    TER · NMS · Technology

    Teradyne, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 117.82

    Market price

    USD 261.01

    Implied upside

    -54.9%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 6.3% of revenue against depreciation of 4.0%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 49.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 117.82-54.9%
    Exit multiple
    USD 225.09-13.8%
    Market price
    USD 261.01

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 4.8bnUSD 6.0bnUSD 7.3bnUSD 8.7bnUSD 10.1bnUSD 11.4bnUSD 12.7bnUSD 13.7bnUSD 14.4bnUSD 14.8bn+13.3%
    EBITUSD 1.0bnUSD 1.3bnUSD 1.6bnUSD 1.9bnUSD 2.2bnUSD 2.5bnUSD 2.8bnUSD 3.0bnUSD 3.2bnUSD 3.2bn+13.3%
    NOPATUSD 907.7mUSD 1.1bnUSD 1.4bnUSD 1.6bnUSD 1.9bnUSD 2.2bnUSD 2.4bnUSD 2.6bnUSD 2.7bnUSD 2.8bn+13.3%
    Add depreciation & amortisationUSD 190.3mUSD 237.2mUSD 289.1mUSD 344.3mUSD 400.5mUSD 454.8mUSD 503.9mUSD 544.4mUSD 573.1mUSD 587.4m+13.3%
    Less capital expenditureUSD -301.3mUSD -373.1mUSD -451.7mUSD -534.4mUSD -617.5mUSD -696.6mUSD -766.7mUSD -822.6mUSD -860.1mUSD -875.5m+12.6%
    Capex, % of revenue6.3%6.3%6.2%6.2%6.1%6.1%6.1%6.0%6.0%5.9%-
    Less increase in working capitalUSD -350.6mUSD -259.1mUSD -286.6mUSD -305.1mUSD -310.7mUSD -300.3mUSD -271.5mUSD -223.7mUSD -158.5mUSD -79.2m-15.2%
    Free cashflow to firmUSD 446.2mUSD 736.4mUSD 929.5mUSD 1.1bnUSD 1.4bnUSD 1.6bnUSD 1.9bnUSD 2.1bnUSD 2.3bnUSD 2.4bn+20.7%
    Discount factor0.94830.85280.76700.68980.62030.55790.50170.45120.40580.3649-
    Present valueUSD 423.1mUSD 628.0mUSD 712.9mUSD 791.0mUSD 857.5mUSD 907.8mUSD 937.9mUSD 945.1mUSD 928.4mUSD 888.4m-
    Present Value Of The ForecastUSD 8.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.500Reported 1.747, pulled toward 1.0 (Blume)
    Cost of equity11.24%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 100.6x interest cover. Book interest / average debt was lower, at 3.8%.
    Market capitalisationUSD 40.8bn99.3% of capital
    Total debtUSD 283.2m0.7% of capital, book value as a proxy
    Tax rate13.4%Effective, capped at statutory
    WACC11.20%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 117.82

    57% of EV

    Forecast FCFF, final year
    USD 2.4bn
    Capex at depreciation, working capital in reinvestment
    USD 2.9bn
    Less reinvestment at g/ROIC (13.2% of NOPAT)
    USD -381.0m
    Capitalised
    USD 2.5bn
    ROIC (reported)
    18.9%
    Terminal value, undiscounted
    USD 29.5bn
    Terminal value, discounted
    USD 10.8bn
    Enterprise value
    USD 18.8bn
    Less net debt
    USD -38.8m
    Equity value
    USD 18.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 225.09

    78% of EV

    Terminal value, undiscounted
    USD 76.4bn
    Terminal value, discounted
    USD 27.9bn
    Enterprise value
    USD 35.9bn
    Less net debt
    USD -38.8m
    Equity value
    USD 36.0bn

    Spread between methods: 63%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.20%152.98156.07159.74164.15169.49
    10.20%132.19133.91135.97138.43141.38
    11.20%115.85116.74117.82119.13120.71
    12.20%102.71103.08103.55104.16104.92
    13.20%91.9591.9792.0692.2392.48

    Outlined: this model. Green text: above today's price of 261.01. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year0.4%16.6%27.7%
    EBIT margin26.9%21.9%46.2%
    Discount rate-11.2%6.8%
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    Yahoo Finance and RBA data. General information, not advice. Methodology.