It has been about a month since the last earnings report for Teledyne Technologies (TDY). Shares have added about 1.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Teledyne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Teledyne Technologies’ Q3 Earnings Top Estimates, Revenues Rise Y/Y  

Teledyne Technologies reported third-quarter 2024 adjusted earnings of $5.10 per share, which surpassed the Zacks Consensus Estimate of $4.97 by 2.6%. The bottom line also improved 1% from $5.05 recorded a year ago.

The company recorded GAAP earnings of $5.54 per share, up 33.5% from the prior-year level of $4.15.

The year-over-year improvement in the bottom line can be attributed to higher net sales and operating income in the third quarter than the year-ago reported actuals. 

Operational Highlights

Total sales were $1.44 billion, which beat the Zacks Consensus Estimate of $1.42 billion by 1.3%. The top line also rose 2.9% from $1.40 billion reported a year ago. This improvement can be attributed to higher year-over-year sales recorded in its Instrumentation, Aerospace and Defense Electronics as well as Engineered Systems business segments.

Segmental Performance

Instrumentation: Sales in this segment increased 6.3% year over year to $349.8 million, driven by higher sales of marine instrumentation due to stronger offshore energy and defense markets.

The adjusted operating income increased 12.6% year over year to $96.3 million.

Digital Imaging: Quarterly sales in this division fell 1% year over year to $768.4 million. The decrease was due to lower sales of industrial automation imaging systems and X-ray products.

The adjusted operating income dropped 9.1% year over year to $123.9 million.

Aerospace and Defense Electronics: Sales in this segment totaled $200.2 million, up 9.2% from the top line recorded in the prior-year quarter. The improvement was driven by higher sales of aerospace and defense electronics.

The adjusted operating income increased 14% year over year to $56.3 million.

Engineered Systems: Revenues in this division improved 9.4% year over year to $125.1 million, driven by higher sales of engineered products, particularly electronic manufacturing services products, and energy systems.

This segment's operating income improved 18.3% year over year to $12.9 million.

Financial Condition

Teledyne’s cash and cash equivalents totaled $561 million as of Sept. 29, 2024, compared with $648.3 million as of Dec. 31, 2023. Its long-term debt was $2.65 billion at the end of the third quarter of 2024 compared with $2.64 billion as of Dec. 31, 2023.

Cashflow from operating activities totaled $249.8 million compared with $278.2 million in the prior-year quarter.

Capital expenditure amounted to $21.1 million, down from $23 million in the prior-year quarter.

TDY generated free cash flow of $228.7 million, highlighting a 10.4% year-over-year decrease.

Guidance

Teledyne expects to generate adjusted earnings in the band of $5.13-$5.23 per share for the fourth quarter of 2024. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $5.33, higher than the company's guided range.

For 2024, Teledyne now expects its adjusted earnings to be in the range of $19.35-$19.45 per share (compared with the earlier guidance of $19.25-$19.45). The Zacks Consensus Estimate for earnings is pegged at $19.43 per share, higher than the midpoint of the company’s new guided range.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Teledyne has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Teledyne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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