Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Teradyne, Inc. (TER) Beats , Guides High On Strength Of Wireless Test Orders, Shares Jump

Expected weakness in Teradyne, Inc. (NYSE:TER)‘s semiconductor test orders amid an industry slump was more than offset by strength in the company’s wireless test orders, as it posted a revenue and earnings beat for the second quarter in the after-hours yesterday, in addition to providing strong third quarter guidance. Shares have gained 6% today on the results, which consisted of Teradyne earning $0.53 per share on a non-GAAP basis on revenue of $513 million in the second quarter. Analysts were expecting $0.45 in earnings per share on $487.60 million in revenue. The company’s third quarter guidance was also strong, with analysts’ estimates for the period falling on the lower end of Teradyne’s own guidance. While semiconductor testing was responsible for 78% of the company’s revenue in the last quarter, its bookings for that segment decline slightly year-over-year, while the bookings for its wireless test soared by over 200%, as the segment is poised to pull in a bigger chunk of the company’s revenues in the future. Gross margins also improved to 58.3%, up by more than two percentage points quarter-over-quarter, and three percentage points year-over-year.

board, chip, semiconductor

The improved results coincide with bullishness towards the company among the smart money tracked by Insider Monkey. Heading into the second quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish in this stock, an increase of four funds from the previous quarter. While their total holdings did decline by 5.7% to $578 million, the stock depreciated by 4.7% during the same time, accounting for much of the dip, although collectively, we can see funds pulled a small amount of money out of the stock. Since the end of the quarter, the stock has made back its losses from the first quarter.

Most investors can’t outperform the stock market by individually picking stocks because stock returns aren’t evenly distributed. A randomly picked stock has only a 35% to 45% chance (depending on the investment horizon) to outperform the market. There are a few exceptions, one of which is when it comes to purchases made by corporate insiders. Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012 and they have returned more than 123% over the ensuing 34 months, outperforming the S&P 500 Index by nearly 67 percentage points (read the details here). The trick is focusing only on the best small-cap stock picks of funds, not their large-cap stock picks which are extensively covered by analysts and followed by almost everybody.

Insider transactions can also provide us with some valuable insight as we look to uncover stocks with strong potential. At Teradyne, Inc. (NYSE:TER) there have not been any insider purchases this year, while there have been a number of sales, chiefly by Director Michael Bradley, who’s sold about 35,000 shares this year.

With all of this in mind, we’re going to take a glance at the fresh smart money action surrounding Teradyne, Inc. (NYSE:TER).

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.