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Why Is Teledyne (TDY) Up 2.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Teledyne Technologies (TDY - Free Report) . Shares have added about 2.7% 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 its most recent earnings report in order to get a better handle on the important drivers.

Teledyne Technologies Q4 Earnings & Sales Top Estimates

Teledyne Technologies reported adjusted fourth-quarter 2018 earnings of $2.33 per share, which surpassed the Zacks Consensus Estimate of $2.19 by 6.4%. The bottom line also improved 27.3% from the year-ago quarter’s figure of $1.83.

Excluding one-time adjustments of $4.4 million, the company reported GAAP earnings of $2.45 per share, mirroring 33.2% year-over-year improvement from $1.84 registered in the prior-year quarter.

The year-over-year bottom-line growth can be attributed to impressive sales figure as well as rise in operating income that Teledyne witnessed in the reported quarter.

GAAP earnings came in at $9.01 per share during 2018, reflecting an increase of 46.9% from $6.26 a year ago.

Operational Highlights

In the reported quarter, total sales amounted to $748.4 million, which exceeded the Zacks Consensus Estimate of $728 million by 2.8%. The top line also increased 6.2% from $704.4 a year ago. Notably, all segments registered a solid year-over-year sales growth in the fourth quarter.

Teledyne generated sales worth $2,901.8 million in 2018, which outpaced the prior-year figure of $2,603.8 million by 11.4%.

Segmental Performance

Instrumentation: Sales at this segment rose 3.4% year over year to $263.4 million in the fourth quarter. Increased sales of test and measurement instrumentation and environmental instrumentation led to the upside.

Operating income surged 40.1% year over year to $43 million on account of improved sales and higher margins across most product lines.

Digital Imaging: Quarterly sales at this division increased 9.3% year over year to $225.9 million. The improvement can be attributed to increased sales of X-ray detectors and generators for life sciences applications and MEMS products.

Operating income grew 3.3% year over year to $37.1 million backed by higher sales.

Aerospace and Defense Electronics: At this segment, quarterly sales of $178.3 million rose 2.8% from the prior-year quarter number owing to sales of defense electronics.

Operating income improved 7% year over year to $36.5 million driven by favorable product mix.

Engineered Systems: Sales at this division grew 16.3% year over year to about $80.8 million in the fourth quarter. The uptick was driven by higher sales of engineered products and services.

Operating income increased 6% to $8.8 million on account of solid sales growth.

Financial Condition

Teledyne’s cash totaled $142.5 million as of Dec 30, 2018, compared with $70.9 million at the end of 2017. Long-term debt and capital lease obligations summed $612.3 million compared with $1,069.3 million at 2017-end.

Cash from operations at the end of 2018 amounted to $446.9 million compared with $374.7 million at 2017-end.

In 2018, capital expenditures were $86.8 million compared with $58.5 million in the year-ago quarter. During the year, the company generated free cash flow of $360.1 million, reflecting 13.9% annual growth.

Guidance

Teledyne expects to generate GAAP earnings per share of $1.87-$1.92 and $9.25-$9.35 for first-quarter and full-year 2019, respectively. Currently, the Zacks Consensus Estimate for Teledyne’s full-year earnings is pegged at $9, lower than the company’s bottom-line predictions.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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