Teledyne: Slow And Steady Works For Management, But Not For Me

seekingalpha08-28

Teledyne, while well-managed and positioned, faces growth slowdown concerns and may not outperform the S&P 500; a dividend would make the investment more attractive.Teledyne’s key markets, including ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2462120630?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/113456532/image_113456532.jpg","is_english":true,"pubTime":"2024-08-28 08:40","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2462120630","market":"us","top_or_hot":-1,"title":"Teledyne: Slow And Steady Works For Management, But Not For Me","media":"seekingalpha","content":"<div>\n<p>Teledyne, while well-managed and positioned, faces growth slowdown concerns and may not outperform the S&P 500; a dividend would make the investment more attractive.Teledyne’s key markets, including ...</p>\n\n<a href=\"https://seekingalpha.com/article/4717470-teledyne-stock-slow-and-steady-works-for-management-but-not-for-me-reiterate-hold\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Teledyne: Slow And Steady Works For Management, But Not For Me</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTeledyne: Slow And Steady Works For Management, But Not For Me\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-28 08:40 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4717470-teledyne-stock-slow-and-steady-works-for-management-but-not-for-me-reiterate-hold><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Teledyne, while well-managed and positioned, faces growth slowdown concerns and may not outperform the S&P 500; a dividend would make the investment more attractive.Teledyne’s key markets, including ...</p>\n\n<a href=\"https://seekingalpha.com/article/4717470-teledyne-stock-slow-and-steady-works-for-management-but-not-for-me-reiterate-hold\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK6116","symbol_name":"汽车零售","start_time":0,"source_url":"https://seekingalpha.com/article/4717470-teledyne-stock-slow-and-steady-works-for-management-but-not-for-me-reiterate-hold","article_id":"2462120630","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/113456532/image_113456532.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2462120630","pubTimestamp":1724805632,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Teledyne, while well-managed and positioned, faces growth slowdown concerns and may not outperform the S&P 500; a dividend would make the investment more attractive.Teledyne’s key markets, including s","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK6116":"汽车零售","LU1244550494.USD":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","GD":"通用动力","BK6517":"汽车股","SJY.SI":"MEGROUP LTD.","LU1929549753.HKD":"FRANKLIN INCOME \"A\" (HKD) INC","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","NOC":"诺斯罗普格鲁曼","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","LU1366192091.USD":"ALLIANZ US EQUITY PLUS \"AM\" (USD) INC","BK4516":"特朗普概念","BK4187":"航天航空与国防","BK4532":"文艺复兴科技持仓","BK4564":"太空概念","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","RTX":"雷神技术公司","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","BK4585":"ETF&股票定投概念","BK4157":"电子设备和仪器","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","BK4566":"资本集团","TDY":"Teledyne Technologies Inc","LMT":"洛克希德马丁","BK4550":"红杉资本持仓","BK4588":"碎股","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1244550577.SGD":"FTIF - Franklin Global Multi-Asset Income A (Mdis) SGD-H1"},"translate_title":"Teledyne：缓慢而稳定适合管理层，但不适合我","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TDY":1,"SJY.SI":1,"RTX":1,"NOC":1,"LMT":1,"GD":1},"content_text":"Teledyne, while well-managed and positioned, faces growth slowdown concerns and may not outperform the S&P 500; a dividend would make the investment more attractive.Teledyne’s key markets, including subsea tech, face competition from larger defense firms benefiting from AI and quantum technology consolidation.Near-term growth is likely, with a potential 14.6% market cap increase by FY25, but long-term risks remain due to competitive pressures and supply chain vulnerabilities.   Buena Vista Images I last covered Teledyne (NYSE:TDY) in March; I put out a Hold rating at the time on concerns of no margin of safety in the price, as well as growth slowdown concerns, which led me to believe that the investment would not outperform the S&P 500 (SP500) moving forward. Management is doing well to continue to sustain the business's position in the market, but consolidation risks are growing with the advent of AI, ML and quantum computing technologies being developed and deployed by major defense companies. I think Teledyne would be an attractive investment if it began to pay a dividend because, as it stands, the returns from fundamental growth alone do not indicate an investment worth buying for the long term. Q2 Earnings Insights First of all, Teledyne had its Q2 earnings results reported on 7/24/2024. It beat its actual normalized EPS estimate by $0.08 and beat its revenue estimate by $14.37M. Furthermore, it reaffirmed its FY24 outlook of $19.25 to $19.45 non-GAAP EPS, against the $16.10 consensus. Management also believes its Q3 non-GAAP EPS will be in the range of $4.90 to $5.00 against the $4.19 consensus. In my opinion, these results, even at face value, are a reason to be bullish on Teledyne. It shows that management is in a position of strength, and the recent earnings and revenue beat in Q2 shows a business that is outperforming analysts' expectations. This bodes well for future stock price movements. In addition, Teledyne achieved an all-time record free cash flow of $301M, which is significantly higher than the $163.2M recorded in the prior year. Management did outline a 6.8% YoY decrease in sales in its Digital Imaging segment and an 8.7% decrease in its Engineered Systems segment, but its Aerospace and Defense Electronics segment increased by 4.5%, and its Instrumentation segment increased by 1.6%. It is important to recognize that while the company beat analyst estimates, the company still reported a quarter of contraction, with a 3.6% YoY decrease in net sales and net income of $180.2M, down from $185.3M in Q2 2023. Therefore, the results represent a mixture of being above expectations but still in a year of contraction. This is set to improve in the fiscal period ending December 2025, when 13% annual YoY normalized EPS growth is forecasted, as compared to a -12.5% contraction in the fiscal period ending December 2024. Technology Portfolio, Marine/Subsea Technologies, & Leadership/Succession Planning Teledyne Technologies provides technologies for industrial growth markets, including aerospace and defense, factory automation, environmental monitoring, and more. Its products include digital imaging sensors, cameras, and systems, which are designed to operate in challenging environments, ensuring performance and reliability. The company's portfolio includes digital imaging and sensors, the former of which is a market expected to grow at a compound annual growth rate of approximately 7.7% from 2020 to 2027. It also provides avionics, surveillance, and communications systems, which are essential for the defense and aerospace sectors. Additionally, Teledyne's instrumentation for monitoring environmental parameters is crucial as the global environmental monitoring market is expected to reach $21B by 2025, growing at a compound annual growth rate of 7.5% from 2019 to 2025. Furthermore, Teledyne Marine is a leader in subsea technology, providing a comprehensive range of products and services across hydrography, offshore, dredging, defense, and marine research sectors. According to Mordor Intelligence, the global subsea systems market is projected to grow from $19.85B in 2024 to $26.54B by 2029 at a CAGR of 5.98%. This is anticipated due to the rising demand for oil and gas, especially in deep-water and ultra-deep-water exploration and production activities. The subsea technology market is characterized by advancements in engineering and infrastructure development, including autonomous underwater vehicles and subsea processing systems. As Teledyne Marine is considered one of the leaders in this field, as the market grows, including due to offshore mining and oceanographic research activities, Teledyne could continue to sustain high growth from this segment. In terms of management, which I did not analyze in my previous coverage, recently Edwin Roks was promoted to CEO and George C. Bobb III to President and COO. Both have extensive backgrounds within the company and have been instrumental in driving its strategic initiatives. There is a culture of succession in Teledyne, which means that executives are developed through the ranks, often rather than hired from outside firms, which develops tailored expertise and a close understanding of the specifics of the business. Robert Mehrabian has also been promoted to Executive Chairman, and his focus is on strategy, technology, mergers, and acquisitions. Mehrabian has been at the company since its formation, and he held the position of Chairman, President, and CEO from 2000 until 2018 when he transitioned to the Executive Chairman role. I am particularly bullish on Teledyne for its management, as it is clearly a close-knit culture, but I don't think this means it will beat the S&P 500 long-term despite it being able to sustain itself and continue to grow moderately. PAX Tech Magazine Growth Expectations, Valuation Analysis, & 1-Year Price Target First of all, it is important to get a perspective that this investment is not high-growth. This means that even if the company is potentially fairly valued, investors cannot expect to receive market-beating returns on fundamental growth prospects alone. Consider that for FY25, its normalized EPS is expected by Wall Street analysts to grow at just 13% and its revenues at just 5%. For FY26, this reduces to 10% and 4.9%, respectively. This makes me much less bullish on the company if investing for pure stock price returns and not for other sentimental reasons. This is especially true because TDY does not pay a dividend. The stock currently has a forward P/E GAAP ratio of nearly 26, which is 17.35% lower than its 5-year average, potentially indicating a reason to buy it. However, it is important to understand that its growth rates have also reduced, down from 11.4% for forward revenue growth as a 5-year average. Data by YCharts The market has clearly priced Teledyne's lower growth rates recently into the stock already, which leads me to believe that it is currently fairly valued. That being said, I think we could see some valuation multiple expansion in FY25 as its annual growth rates become positive again, causing optimism from investors. As such, I think we could see the PS ratio expand to around 3.8 in FY25, and if the revenue estimate of $5.91B for FY25 is met, the market cap could be $22.46B before December 2025. The current market cap is $19.6B, indicating a potential 14.6% growth in around 12 months in a bull case based on expanding valuation multiples due to investor sentiment. However, I do not expect this high CAGR to continue long-term because there are indications of revenue growth slowdown in the Wall Street estimates, especially when compared to historical revenue growth, despite continued operational relevance and success. Competition, Technological Disruption Potential, & Supply Chain Risks Teledyne faces a lot of established direct competitors, including Raytheon (RTX), Lockheed Martin (LMT), Northrop Grumman (NOC), and General Dynamics (GD). These compete aggressively in aerospace, defense, and marine sectors, and notably, Teledyne is the smallest of these firms. This opens it up to significant areas where it will undoubtedly be outcompeted for larger contracts, especially in defense, where economies of scale and reputational benefits enjoyed by larger firms like Lockheed Martin and Northrop Grumman will come into play. Data by YCharts Furthermore, at this time, AI and ML are transforming the aerospace and defense sectors by enhancing decision-making, operational efficiency, and situational awareness. Intelligent technology is being integrated into sensors, weapons, and information systems, and Lockheed Martin and Northrop Grumman are at the forefront of AI integration. For example, Lockheed Martin's AI Factory initiative is setting industry standards across defense applications. I think this could be problematic for Teledyne moving forward, especially as firms with higher financial resources consolidate the rise of autonomous technology. Anduril Industries and other companies are leading the integration of AI into autonomous systems, enhancing surveillance and operational capabilities. There is also the potential for quantum technologies, including quantum computing and quantum sensors, to offer unprecedented computational power and secure communication networks. This could make Teledyne's more traditional systems less effective and desirable. Lastly, Teledyne relies on a limited number of key suppliers for critical components, especially semiconductors, an industry that has faced significant shortages since 2022 as a result of high demand and supply chain bottlenecks persisting into 2024. This can strain Teledyne's profit margins and manufacturing capacity, especially as it faces competition from larger competitors who are likely to place larger orders that take precedence with major semiconductor manufacturers. Ongoing geopolitical tensions between the United States and China could exacerbate this issue, disrupting the flow of raw materials and components, which could impact Teledyne's supply chain. This is one area to monitor, but it is also worth remembering that these supply chain risks affect the macroeconomy, not just Teledyne specifically. Nonetheless, it is still a reason to strategically diversify at this time, in my opinion. Conclusion  Teledyne is clearly a well-managed company with a strong position in the market, but it is small compared to the larger players who currently dominate. I fear that as technological advancements become more pronounced, AI and automation capabilities at the elite level may be consolidated by major defense companies, pushing Teledyne further into the background. That being said, in the near term, I do think TDY stock will perform well, but due to long-term risks, my rating is still a Hold for now.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.4","shortVersion":"4.26.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2462120630"}