Teledyne’s third quarter was marked by revenue and non-GAAP profit exceeding Wall Street expectations, though the market responded negatively to the results. Management attributed the performance to robust defense-related businesses, growth in unmanned systems, and a recovering short-cycle commercial segment. CEO Robert Mehrabian highlighted, “Our strong portfolio always protects us from market turbulence,” while pointing to record new orders, particularly backlog growth at Teledyne FLIR. Segment performance varied, with industrial vision systems and environmental instrumentation showing gains, offset by softness in certain digital imaging and marine products.
Is now the time to buy TDY? Find out in our full research report (it’s free for active Edge members).
Teledyne (TDY) Q3 CY2025 Highlights:
- Revenue: $1.54 billion vs analyst estimates of $1.53 billion (6.7% year-on-year growth, 0.8% beat)
- Adjusted EPS: $5.57 vs analyst estimates of $5.47 (1.8% beat)
- Adjusted EBITDA: $424.5 million vs analyst estimates of $375.3 million (27.6% margin, 13.1% beat)
- Management slightly raised its full-year Adjusted EPS guidance to $21.53 at the midpoint
- Operating Margin: 18.4%, in line with the same quarter last year
- Organic Revenue rose 1.9% year on year vs analyst estimates of 1.6% growth (31 basis point beat)
- Market Capitalization: $24.67 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Teledyne’s Q3 Earnings Call
- Andrew Buscaglia (BNP Paribas) asked about the sustainability of growth across segments and whether recent strength had been pulled forward. CEO Robert Mehrabian explained that portfolio diversity led to variations, with marine and unmanned systems showing continued strength, but acknowledged some pull-ins in test and measurement.
- Greg Konrad (Jefferies) pressed on Digital Imaging margins and the path to recovery. Mehrabian said margins should be flat year-over-year despite restructuring costs, with future improvement expected as cost reductions and business stabilization take effect.
- James Ricchiuti (Needham & Company) sought details on defense contract opportunities and timing. President George Bobb highlighted near-term unmanned systems contracts, such as the Rogue 1 for the U.S. Marine Corps, but said award timelines depend on government operations.
- Jordan Lyonnais (Bank of America) inquired about the impact of Boeing 737 production rates and critical minerals availability. Bobb noted that destocking would limit near-term aerospace benefit, while Mehrabian said mineral exposure was limited and well-managed.
- Jonathan Siegmann (Stifel) asked about the attractiveness of low-cost, high-volume drone components. Mehrabian responded that Teledyne is cost-competitive in drones but prioritizes accuracy and capability, with growth expected in both aerial and underwater unmanned vehicles.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be monitoring (1) progress on major defense contract awards, particularly in unmanned systems and European markets, (2) margin recovery in Digital Imaging and successful execution of cost reduction efforts, and (3) continued stabilization of commercial automation and instrumentation demand. We will also track the impact of U.S. government funding dynamics and further M&A activity as potential drivers of performance.
Teledyne currently trades at $524.68, down from $574.17 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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