Related questions this article answers
- Is Teradyne stock overvalued right now?
- Is TER undervalued?
- Should I buy Teradyne stock?
- Is now a good time to buy TER?
- What is Teradyne's fair value?
- Is TER a good long term investment?
The short answer
Short answer: Teradyne looks overvalued at current levels. Compared with the recent share price of $354.11, the current analyst target near $351.09 points to a stock that is trading close to fair value. Teradyne is being valued in the context of a business with gross margin near 58.8%, which helps show what kind of operating model investors are paying for. That leaves Teradyne looking rich unless the next leg of earnings or cash flow growth arrives fast enough to justify the current price.
Why valuing this kind of technology company is more complex than it looks
Teradyne operates in Semiconductors. Companies in this part of the market are usually valued on a mix of current earnings, expected growth, margin durability, and cash generation.
The reason this matters is simple. Two companies can show similar headline multiples and still deserve very different valuations because their margins, cash conversion, and growth durability are not the same.
The 5 key metrics applied to Teradyne
A single ratio rarely tells the whole story. This framework starts with trailing P/E, forward P/E, PEG, EV/EBITDA, and price to sales, then keeps only the metrics that are present and usable for this company.
Trailing P/E
Trailing P/E compares the current share price with the last twelve months of earnings. For Teradyne, the current reading is 101.5x. Shows what the market is paying for Teradyne's recent earnings.
Forward P/E
Forward P/E uses expected earnings instead of trailing earnings. For Teradyne, the current reading is 187.2x. Shows how the market is valuing Teradyne's expected earnings.
PEG ratio
PEG compares the earnings multiple with expected growth. For Teradyne, the current reading is 1.2x. Helps show whether the earnings multiple is being offset by expected growth.
EV/EBITDA
EV/EBITDA compares enterprise value with operating profit before depreciation and amortization. For Teradyne, the current reading is 27.4x. Adds a capital structure aware check on operating valuation.
Price to sales
Price to sales compares market value with revenue. For Teradyne, the current reading is 14.6x. Useful when revenue mix, margins, or future scaling matter as much as near term earnings.
Free cash flow yield
Free cash flow yield compares free cash flow with market value. For Teradyne, the current reading is 1.0%. Shows how much cash Teradyne is generating relative to its market value.
| Metric | Current value | What it suggests |
|---|---|---|
| Trailing P/E | 101.5x | Shows what the market is paying for Teradyne's recent earnings. |
| Forward P/E | 187.2x | Shows how the market is valuing Teradyne's expected earnings. |
| PEG ratio | 1.2x | Helps show whether the earnings multiple is being offset by expected growth. |
| EV/EBITDA | 27.4x | Adds a capital structure aware check on operating valuation. |
| Price to sales | 14.6x | Useful when revenue mix, margins, or future scaling matter as much as near term earnings. |
| Free cash flow yield | 1.0% | Shows how much cash Teradyne is generating relative to its market value. |
| Gross margin | 58.8% | Shows how much of Teradyne's revenue remains after direct costs. |
| Revenue growth | 13.1% | Shows whether Teradyne's top line is still expanding. |
The table is a snapshot of the current setup. It is meant to frame the valuation question, not replace the company specific analysis below.
Teradyne's valuation breakdown
As of Q2 2026, Teradyne traded near $354.11 with a market value near $55.43B.
| Metric | Current value | What it suggests |
|---|---|---|
| Trailing P/E | 101.5x | Shows what the market is paying for Teradyne's recent earnings. |
| Forward P/E | 187.2x | Shows how the market is valuing Teradyne's expected earnings. |
| PEG ratio | 1.2x | Helps show whether the earnings multiple is being offset by expected growth. |
| EV/EBITDA | 27.4x | Adds a capital structure aware check on operating valuation. |
| Price to sales | 14.6x | Useful when revenue mix, margins, or future scaling matter as much as near term earnings. |
| Free cash flow yield | 1.0% | Shows how much cash Teradyne is generating relative to its market value. |
| Gross margin | 58.8% | Shows how much of Teradyne's revenue remains after direct costs. |
| Revenue growth | 13.1% | Shows whether Teradyne's top line is still expanding. |
Metrics move with the market and with each earnings update. If a field is missing or stale, it is intentionally left out here rather than guessed.
What the numbers tell us
The first thing to notice with Teradyne is the gap between trailing and forward earnings valuation. Trailing P/E is near 101.5x while forward P/E is near 187.2x, which tells you the market is already underwriting a specific earnings path.
- Teradyne's forward P/E is not offering much relief versus the trailing multiple, so the market may still be paying up before the earnings improvement is fully visible.
- Teradyne's PEG ratio near 1.2x matters because it tests whether the earnings multiple is being balanced by a credible growth rate.
- Teradyne's price to sales multiple near 14.6x needs to be read beside revenue growth near 13.1%, because rich revenue multiples only hold up when growth quality stays intact.
Teradyne's competitive position
designs, develops, manufactures, sells, and supports automatic test equipment worldwide.
What would make Teradyne look cheaper or more expensive?
What would make it look cheaper
- Teradyne would look cheaper if the business kept growing while valuation multiples moved lower.
- Teradyne would also look more attractive if cash generation improved without the market price rising at the same pace.
What would make it look expensive
- Teradyne would look expensive if earnings or revenue expectations softened while the current multiple stayed elevated.
- Teradyne would also look expensive if margins weakened but the stock kept the same quality premium.
Technology valuation context
Teradyne operates in Semiconductors. Companies in this part of the market are usually valued on a mix of current earnings, expected growth, margin durability, and cash generation.
The verdict
Teradyne looks priced for a very strong execution path from here. The stock can still work, but future earnings and cash flow need to validate the premium already in the shares. With forward P/E near 187.2x, the market is already making a judgment about the next stage of earnings power.
This is analysis of publicly available market data. It is not financial advice, and it should be read in the context of personal goals, risk tolerance, and time horizon.
Want to run the numbers yourself?
Use TopTier Strategy research tools to review TER's live valuation profile, stock page, and related company analysis.
Frequently asked questions
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Data source: TopTier Strategy research platform - toptierstrategy.com/research. Data as of 2026-05-08T00:40:14.785262.