Teradata
TDC
$27.57
-1.18%
Teradata Corporation is a cloud-based data and analytics platform provider, offering software and services that help enterprises integrate data, improve business performance, and enable AI-driven insights through its VantageCloud and ClearScape Analytics products. As a niche player in the data analytics infrastructure space, Teradata competes with larger cloud providers and specialized analytics firms, leveraging its legacy in on-premises data warehousing to transition customers to cloud-native solutions. The current investor narrative centers on Teradata's cloud transformation, with recent quarterly results showing a significant one-time tax benefit that inflated net income, while recurring revenue growth and margin expansion remain key focus areas. The stock has experienced high volatility, including a sharp drop in August 2026 following a market-wide selloff, raising questions about the sustainability of its growth trajectory and the impact of macroeconomic headwinds on enterprise IT spending.…
TDC
Teradata
$27.57
Related headlines
Investment Opinion: Should I buy TDC Today?
Rating: Hold. Teradata is a hold based on its modest growth, attractive forward valuation, and analyst consensus of 'hold' with an average target price of $34.00, implying +22.8% upside. The thesis is that the stock is fairly valued with potential for upside if cloud transition accelerates, but risks from high leverage and operational losses warrant caution. Supporting evidence includes a forward PE of 9.51x, revenue growth of 6.2% YoY, gross margin expansion to 62.16%, and strong free cash flow of $679 million. However, the negative operating income in Q1 2026 and high debt-to-equity ratio of 2.44 are concerning. The rating would upgrade to Buy if revenue growth accelerates above 10% and operating margins improve, or downgrade to Sell if the company fails to generate positive operating income and revenue growth falls below 5%. Overall, the stock appears fairly valued relative to its growth prospects, but not a compelling buy at current levels.
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TDC 12-Month Price Forecast
The AI assessment is neutral, reflecting the balanced risk-reward profile. The stock's low forward PE and strong cash flow provide downside support, but the decelerating growth and operational losses limit upside potential. The stance would upgrade to bullish if revenue growth accelerates above 10% and operating margins turn positive, or downgrade to bearish if the company fails to generate positive operating income and revenue growth falls below 5%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Teradata's 12-month outlook, with a consensus price target around $34.00 and implied upside of +23.3% versus the current price.
Average Target
$34.00
0 analysts
Implied Upside
+23.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$27 - $49
Analyst target range
Analyst coverage is moderate, with 8 analysts providing ratings, and the consensus recommendation is 'hold' with a mean rating of 2.875 (where 1 is strong buy and 5 is sell). The average target price is $34.00, implying an upside of +22.8% from the current price of $27.68, while the low target is $27.00 (near current price) and the high target is $49.00 (a 77% upside). The distribution of ratings includes 1 buy, 5 holds, and 2 underweights, indicating a cautious but not bearish sentiment. The wide range between low and high targets suggests high uncertainty about the company's growth prospects, with the high target likely assuming successful cloud adoption and margin expansion, while the low target reflects concerns about competitive pressures and revenue growth deceleration. Recent institutional actions have been mixed, with Barclays maintaining an underweight rating, while Citigroup and Citizens have reiterated buy/outperform ratings, indicating a lack of clear directional consensus.
Bulls vs Bears: TDC Investment Factors
Teradata presents a mixed picture: it has a solid recurring revenue base, strong free cash flow, and an attractive forward valuation, but faces decelerating growth, high leverage, and recent operational losses. The bull case rests on successful cloud transition and margin expansion, while the bear case highlights competitive pressures and financial risks. Currently, the bearish evidence is slightly stronger due to the negative operating income and underperformance, but the low forward PE and analyst upside suggest potential value. The key tension is whether the company can accelerate growth and improve profitability to justify its valuation, or if it will continue to lag peers in a competitive data analytics market.
Bullish
- Cloud transition driving recurring revenue: Teradata's shift to subscription-based models is evident, with recurring revenue streams (subscription software licenses of $99M and services of $301M) dominating the Q1 2026 revenue mix. This provides a more predictable revenue base and supports long-term growth, as perpetual software and hardware sales are minimal ($1M).
- Strong free cash flow generation: Teradata generated $679 million in free cash flow over the trailing twelve months, a robust figure relative to its market cap of $2.87 billion. This cash generation provides financial flexibility for investments, debt reduction, or potential shareholder returns, and supports the company's ability to fund its cloud transition.
- Attractive forward valuation: The forward PE ratio of 9.51x is significantly lower than the trailing PE of 22.06x, implying the market expects substantial earnings growth. This valuation is inexpensive for a software company, especially considering the PEG ratio of 1.30x, which suggests the stock is reasonably priced relative to its expected growth.
- Analyst target upside potential: The average analyst target price of $34.00 implies a +22.8% upside from the current price of $27.68, while the high target of $49.00 suggests a +77% upside. Even the low target of $27.00 is near the current price, indicating limited downside risk according to analysts.
Bearish
- Revenue growth decelerating: Revenue growth has slowed to 6.2% YoY in Q1 2026, down from 6.1% in Q3 2025 and 5.7% in Q2 2025, indicating a stable but sluggish growth trajectory. This is well below the double-digit growth rates typical of high-growth software peers, raising concerns about the company's competitive position.
- High debt-to-equity ratio: Teradata's debt-to-equity ratio stands at 2.44, indicating significant leverage. This financial risk could constrain the company's ability to invest in growth initiatives or weather economic downturns, especially if interest rates remain elevated.
- Negative operating income in Q1 2026: Despite a one-time tax benefit inflating net income, operating income was -$36 million in Q1 2026, a sharp decline from the positive operating income of $54 million in Q4 2025. This suggests underlying operational challenges, possibly due to increased investments or cost pressures.
- Stock underperforming market: Teradata's stock has declined -17.52% over the past 6 months and -18.13% over the past 3 months, significantly underperforming the S&P 500, which gained 13.87% and 5.03% over the same periods. This relative weakness indicates negative investor sentiment and potential momentum issues.
TDC Technical Analysis
Teradata's stock has been in a broad uptrend over the past year, with a 1-year price change of +30.75%, but it is currently trading at $27.68, which is only 66% of its 52-week range (low: $20.17, high: $41.78). This positioning suggests the stock has pulled back significantly from its highs, indicating a potential value opportunity if the long-term trend resumes, but also reflecting a loss of momentum. The 6-month price change is -17.52%, and the stock is down -6.77% year-to-date, showing that the uptrend has stalled and the stock is now in a corrective phase.
Beta
0.59
0.59x market volatility
Max Drawdown
-35.2%
Largest decline past year
52-Week Range
$20-$42
Price range past year
Annual Return
+33.9%
Cumulative gain past year
| Period | TDC Return | S&P 500 |
|---|---|---|
| 1m | -6.0% | +1.9% |
| 3m | -17.6% | +2.3% |
| 6m | -10.8% | +10.6% |
| 1y | +33.9% | +19.5% |
| ytd | -7.1% | +11.8% |
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TDC Fundamental Analysis
Teradata's revenue has shown modest growth, with the most recent quarter (Q1 2026) reporting revenue of $444 million, a 6.2% YoY increase from $418 million in Q1 2025. However, this growth is decelerating from earlier quarters, as Q3 2025 revenue was $416 million (up 6.1% YoY) and Q2 2025 revenue was $408 million (up 5.7% YoY), indicating a stable but slow growth trajectory. The company's recurring revenue streams, including subscription software licenses ($99 million) and services ($301 million), are the primary drivers, while perpetual software and hardware sales are minimal ($1 million), reflecting the ongoing shift to subscription-based models. This growth is below the double-digit rates typical of high-growth software peers, but it is consistent with a mature data analytics vendor transitioning to the cloud.
Quarterly Revenue
$444000000.0B
2026-03
Revenue YoY Growth
+6.2%
YoY Comparison
Gross Margin
62.2%
Latest Quarter
Free Cash Flow
$679000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is TDC Overvalued?
Given that Teradata is profitable, the primary valuation metric is the trailing PE ratio, which stands at 22.06x, while the forward PE is 9.51x, implying that the market expects significant earnings growth in the next year. This wide gap between trailing and forward PE suggests that the market is pricing in a substantial improvement in profitability, likely driven by the one-time tax benefit in Q1 2026 and operational leverage. The PS ratio is 1.73x, which is relatively low for a software company, but the PEG ratio of 1.30x indicates that the stock is reasonably valued relative to its expected earnings growth.
PE
22.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 2x~97x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Teradata's high debt-to-equity ratio of 2.44 indicates significant leverage, which could strain cash flows if interest rates rise or earnings decline. The company's operating income turned negative in Q1 2026 (-$36 million), despite a one-time tax benefit inflating net income, suggesting underlying operational challenges. Revenue growth is decelerating (6.2% YoY in Q1 2026 vs. 6.1% in Q3 2025), and the company's reliance on recurring revenue, while stable, may not be enough to offset competitive pressures. Additionally, the current ratio of 0.92 indicates potential liquidity concerns, as current liabilities exceed current assets.
FAQ
The key risks are: 1) Financial risk from high debt-to-equity ratio of 2.44, which could strain cash flows if interest rates rise. 2) Operational risk from negative operating income in Q1 2026, indicating potential cost issues. 3) Competitive risk from larger cloud providers and specialized analytics firms, which could pressure growth. 4) Macro risk from economic downturns reducing IT spending, as evidenced by the stock's -17.52% decline over 6 months. The most severe risk is a prolonged period of weak growth and margin compression, which could lead to a decline towards the 52-week low of $20.17, a -27% downside.
The 12-month forecast is mixed. In the base case (50% probability), the stock is expected to trade around $34.00, the analyst average target, reflecting modest upside. In the bull case (25% probability), it could reach $49.00 if growth accelerates and margins expand. In the bear case (25% probability), it could fall to $20.17 if competition intensifies and growth stalls. The most likely scenario is the base case, assuming the company continues its steady but slow growth. Key assumptions include stable revenue growth of 6-8% and gradual margin improvement.
TDC appears fairly valued based on its forward PE of 9.51x, which is low for a software company, but the trailing PE of 22.06x is higher due to the one-time tax benefit. The PS ratio of 1.73x is also reasonable. Compared to peers, TDC trades at a discount, but this reflects its slower growth. The PEG ratio of 1.30x suggests the stock is reasonably priced relative to its expected earnings growth. The market is pricing in modest growth and margin improvement, but not a major acceleration. If the company can deliver on its cloud transition, the stock could be undervalued; otherwise, it is fairly valued.
TDC is a hold, not a compelling buy at current levels. The stock offers a +22.8% upside to the average analyst target of $34.00, but the risk-reward is balanced given the decelerating growth and high debt. The forward PE of 9.51x is attractive, but the negative operating income in Q1 2026 and competitive pressures warrant caution. It could be a good buy for value investors with a long-term horizon who believe in the cloud transition, but only if they are comfortable with the risks. For most investors, waiting for a clearer sign of growth acceleration or a lower entry point would be prudent.
TDC is more suitable for long-term investment, given its transition phase and moderate growth. The stock's beta of 0.587 indicates lower volatility than the market, but its recent price swings (e.g., -35.16% max drawdown) suggest short-term trading risk. The company does not pay a dividend, so returns depend on capital appreciation. With a forward PE of 9.51x and strong free cash flow, long-term investors could benefit if the cloud transition succeeds. A minimum holding period of 3-5 years is recommended to allow the transformation to play out. Short-term traders may find opportunities, but the lack of clear momentum and analyst caution make it less attractive for quick gains.