TER Up 30% In A Month. Do You Buy Or Wait?
Teradyne (TER) stock is up 30.1% in 21 trading days. Already own the stock? Might want to consider booking some profit as there is risk – specific to growth and downturn resilience. Consider the following data:
- Size: A $19 Bil company with $2.8 Bil in revenue currently trading at $118.61.
- Fundamentals: Last 12 month revenue growth of 4.6% and operating margin of 19.2%.
- Liquidity: Has Debt to Equity ratio of 0.0 and Cash to Assets ratio of 0.1
- Valuation: Currently trading at P/E multiple of 40.4 and P/EBIT multiple of 35.4
- Has returned (median) 41.5% within a year following sharp dips since 2010. See TER Dip Buy Analysis.
While we like to ride the momentum if the fundamentals check out – for TER, see Buy or Sell TER Stock – we are vary of bull traps. Specifically, it is worth trying to answer if things get really bad, and TER drops 20-30% to $83.02 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Teradyne (TER) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: TER provides test solutions for semiconductor, system, industrial automation, and wireless device development and manufacturing, including smartphones, tablets, laptops, and IoT devices.
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2022 Inflation Shock
- TER stock fell 57.7% from a high of $168.56 on 27 December 2021 to $71.37 on 14 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $163.00 on 16 July 2024 , and currently trades at $118.61
| TER | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -57.7% | -25.4% |
| Time to Full Recovery | Not Fully Recovered days | 464 days |
2020 Covid Pandemic
- TER stock fell 41.9% from a high of $76.21 on 23 January 2020 to $44.29 on 20 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 5 June 2020
| TER | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -41.9% | -33.9% |
| Time to Full Recovery | 77 days | 148 days |
2018 Correction
- TER stock fell 42.0% from a high of $49.92 on 12 March 2018 to $28.94 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 24 July 2019
| TER | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -42.0% | -19.8% |
| Time to Full Recovery | 212 days | 120 days |
2008 Global Financial Crisis
- TER stock fell 83.8% from a high of $18.30 on 21 June 2007 to $2.97 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 16 February 2011
| TER | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -83.8% | -56.8% |
| Time to Full Recovery | 818 days | 1480 days |
Worried that TER could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.