A month has gone by since the last earnings report for Teradyne (TER). Shares have added about 3.1% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Teradyne due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Teradyne, Inc. before we dive into how investors and analysts have reacted as of late.
Teradyne Q3 Earnings Top Estimates, Revenues Up Y/Y
Teradyne reported third-quarter 2025 non-GAAP earnings of 85 cents per share, which beat the Zacks Consensus Estimate by 8.97% and plunged 5.6% year over year.
Revenues of $769 million beat the Zacks Consensus Estimate by 3.32% and increased 4.3% year over year.
TER’s Q3 Top-line Details
Revenues from Semiconductor Test platforms, Robotics and Product Test were $606 million (78.8% of total revenues), $75 million (9.8%), and $88 million (11.4%), respectively.
In the third quarter, Teradyne reported a non-GAAP gross margin of 58.5%, which contracted 120 basis points (bps) year over year.
In the reported quarter, selling and administrative expenses increased 7.3% year over year to $169.1 million. As a percentage of revenues, selling and marketing expenses were 22%, up 60 bps year over year.
Engineering and development expenses increased 6.2% year over year to $124.8 million.
As a percentage of revenues, engineering and development expenses were 16.2%, up 30 bps year over year.
Non-GAAP Operating income declined 4.9% year over year to $156.9 million. As a percentage of revenues, the operating margin contracted 200 bps on a year-over-year basis to 20.4%.
TER’s Balance Sheet & Cash Flow
As of Sept. 28, 2025, Teradyne’s cash and cash equivalents (including marketable securities) were $297.7 million, lower than $367.9 million as of June 29, 2025.
In the reported quarter, net cash provided by operating activities was $49 million.
TER’s Q4 Guidance
For the fourth quarter of 2025, Teradyne expects revenues between $920 million and $1 billion.
Non-GAAP earnings are expected to be between $1.20 and $1.46 per share.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 33.35% due to these changes.
VGM Scores
At this time, Teradyne has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Teradyne has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Teradyne, Inc. (TER): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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