Teledyne Technologies
TDY
$632.01
-4.76%
Teledyne Technologies is an industrial technology conglomerate that supplies enabling technologies to sense, analyze, and distribute information across four segments — Digital Imaging (its largest at roughly $903M in quarterly revenue), Instrumentation, Aerospace and Defense Electronics, and Engineered Systems — serving industrial, government, medical, and defense markets that demand high reliability. The company is best characterized as a disciplined serial acquirer and niche market leader, holding dominant positions in high-performance sensors, infrared and X-ray imaging, MEMS, and high-reliability analog/mixed-signal semiconductors rather than competing as a broad-based platform vendor. The current investor narrative centers on a reacceleration story: record funded backlog of roughly $5.3 billion, nine consecutive quarters of year-over-year revenue growth culminating in 9.4% YoY growth in the September 2026 quarter, and margin expansion driven by operating leverage and a leaner balance sheet after meaningful debt paydown. Debate now hinges on whether Teledyne can sustain mid-to-high single-digit organic growth and convert its defense/aerospace exposure and imaging franchise into durable double-digit EPS compounding, or whether the recent re-rating already discounts that outcome.…
TDY
Teledyne Technologies
$632.01
Related headlines
Investment Opinion: Should I buy TDY Today?
Rating: Buy, with valuation discipline. The core thesis is that Teledyne is a high-quality, low-leverage serial acquirer whose growth is genuinely reaccelerating — Q3 2026 revenue of $1.685B grew 9.44% YoY, the fastest in the dataset, on top of a record $5.3B funded backlog — while the stock trades at 23.93x forward earnings against a 12-analyst consensus 'buy' (9 Buy, 3 Hold, 0 Sell) and an average target of $770.08, implying roughly +16.0% upside from $663.63. The three Hold ratings clustered at Equal Weight are a valuation caution, not a fundamental objection, and the $646 low target sitting essentially at the current price frames the downside as limited relative to the upside skew.
Supporting evidence is broad and quantified. Valuation is reasonable for the quality: 27.34x trailing and 23.93x forward PE (a 12.5% compression implying real EPS growth), 4.00x price-to-sales, 17.96x EV/EBITDA, and 2.33x price-to-book against a 39.2% gross margin and 14.6% net margin. Growth is accelerating, not stalling — 7.6% YoY in Q1, 8.9% in Q2, 9.44% in Q3 — with sequential revenue climbing from $1.560B to $1.663B to $1.685B. Profitability is expanding: operating margin reached 20.61% in Q3 versus 18.37% a year earlier, and net income rose to $272.8M (16.19% margin) from $220.7M (14.34%). Cash generation is exceptional — $1.148B trailing free cash flow, 90.6% Q3 FCF conversion, only $33M of quarterly capex, 0.251 debt-to-equity, and a 1.64 current ratio — funding both $450.4M of Q2 debt retirement and $91.9M of Q3 buybacks while preserving acquisition dry powder. Consensus fiscal 2026 EPS of $34.49 on revenue of $8.01B is well supported by that backlog.
The risks that could invalidate the thesis are valuation, margin mix, and growth durability. At 27.34x trailing the stock sits in the upper-middle of its 22.1x–30.1x band with a 3.29 PEG, so a deceleration toward low single digits would compress the multiple toward 22x; gross margin already fell to 40.61% in Q3 from 44.40% in Q2, showing mix sensitivity; and Digital Imaging at roughly $903M (about 54% of segment revenue) concentrates exposure. This Buy would upgrade to a higher-conviction stance if the stock breaks above the $697.67 52-week high on volume while gross margin recovers above 42%, and would downgrade to Hold if revenue growth slips below 6% or operating margin falls back under 19%. Verdict: fairly valued to modestly undervalued relative to its own history and to premium tech peers, with the forward multiple — not multiple expansion — doing the work; the stock is not cheap, but it is reasonably priced for a 9% grower with a fortress balance sheet.
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TDY 12-Month Price Forecast
The forward view is constructive but valuation-aware. Teledyne enters the next twelve months with accelerating growth, a record backlog, expanding margins, and a balance sheet that funds both acquisitions and buybacks without leverage risk, and the 9-to-3 analyst consensus with a $770.08 average target (+16.0%) reflects that. The constraint is price: at 27.34x trailing and 23.93x forward with a 3.29 PEG, the stock sits in the upper-middle of its 22.1x–30.1x band, so earnings delivery must carry returns rather than multiple expansion. The 55% base case of $697.67–$770.08 is the most likely path, with a 25% bull case to $915 if margins and growth surprise and a 20% bear case to $483–$646 if growth decelerates. I would upgrade to high confidence on a volume-confirmed break above $697.67 with gross margin back above 42%, and downgrade to neutral if revenue growth falls below 6% or operating margin drops under 19%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Teledyne Technologies's 12-month outlook, with a consensus price target around $770.08 and implied upside of +21.9% versus the current price.
Average Target
$770.08
12 analysts
Implied Upside
+21.9%
vs. current price
Analyst Count
12
covering this stock
Price Range
$646 - $915
Analyst target range
Coverage is solid with 12 analysts, and sentiment is clearly bullish: 9 Buy ratings, 3 Hold, and 0 Sell, yielding a consensus recommendation of "buy" and a recommendation mean of 1.75 (where 1.0 is a strong buy). The average target price of $770.08 implies roughly +16.0% upside from the current $663.63, and the consensus fiscal 2026 EPS estimate of $34.49 on average revenue of $8.01 billion (range $7.94–$8.10 billion) supports the constructive stance. The bullish tilt is consistent with the record backlog and accelerating revenue growth, though the presence of three Hold-equivalent ratings (Barclays, Morgan Stanley, and Citigroup all at Equal Weight/Neutral) shows a meaningful minority remains valuation-disciplined.
The target range of $646.00 to $915.00 is wide — a spread of roughly 42% around the average — signaling genuine disagreement about the growth runway. The $915 high target implies multiple expansion toward the mid-30s PE and assumes the defense/imaging backlog converts into sustained double-digit EPS growth with further margin leverage; the $646 low target sits essentially at the current price and prices in flat-to-modest growth with no re-rating, effectively a "fairly valued" call. Institutional actions show a stable-to-improving pattern — Needham and Stifel reiterated Buy in late October, while Barclays, Morgan Stanley, and Citigroup have held neutral stances without downgrades — suggesting the consensus is anchored rather than drifting. The wide spread and the clustering of low targets near the current price argue for position sizing that respects valuation risk even within a bullish fundamental narrative.
Bulls vs Bears: TDY Investment Factors
The bull case currently holds stronger evidence: accelerating 9.44% revenue growth, a record $5.3B funded backlog, operating margin expansion to 20.61%, a fortress balance sheet with 0.251 debt-to-equity, and a 9-to-3 Buy/Hold analyst consensus with +16% average target upside. The bear case rests primarily on valuation — 27.34x trailing and 23.93x forward earnings sit in the upper-middle of the historical band with a 3.29 PEG — plus three Hold ratings clustered near the current price and gross margin volatility (40.61% in Q3 versus 44.40% in Q2). The single most important tension is whether Teledyne can convert its defense/imaging backlog into sustained mid-to-high single-digit organic growth and double-digit EPS compounding, or whether the recent re-rating already discounts that outcome. If growth holds near 9% and margins stay above 20%, the forward multiple looks reasonable; if growth decelerates toward low single digits, the upper-band valuation leaves meaningful downside. On balance, fundamentals outweigh valuation concerns, but the wide $646–$915 target spread argues for disciplined position sizing.
Bullish
- Revenue growth accelerating to 9.4%: Q3 2026 revenue of $1.685B grew 9.44% YoY, the strongest rate in the dataset versus 8.9% in Q2 and 7.6% in Q1, marking nine consecutive quarters of YoY growth. Sequential revenue has climbed from $1.560B to $1.663B to $1.685B through 2026, showing a durable, broadening reacceleration rather than a one-quarter bounce.
- Record $5.3B funded backlog: The record $5.3B funded backlog provides multi-quarter revenue visibility and de-risks the forward growth case, particularly across the defense and imaging franchises. This backlog underpins the consensus fiscal 2026 revenue estimate of $8.01B (range $7.94–$8.10B) and supports the 9 Buy ratings out of 12 analysts.
- Operating margin expansion to 20.6%: Q3 operating margin reached 20.61%, up from 18.37% a year earlier and 18.86% in Q1 2026, driven by operating leverage and lower SG&A ($258.4M versus $404.9M in Q2). Net income rose to $272.8M at a 16.19% margin from $220.7M and 14.34% a year ago, demonstrating genuine earnings power expansion.
- Fortress balance sheet and 90.6% FCF conversion: Debt-to-equity is just 0.251 with a 1.64 current ratio, and trailing free cash flow of $1.148B against only $33M of Q3 capex reflects a capital-light model. Q3 FCF conversion of 90.6% plus $450.4M of Q2 debt retirement and $91.9M of Q3 buybacks show real capital-return capacity and acquisition dry powder.
Bearish
- Valuation near upper-middle of range: At 27.34x trailing and 23.93x forward earnings, TDY sits in the upper-middle of its multi-year 22.1x–30.1x band, well above the 16.5x trough in Q4 2023. The PEG ratio of 3.29 and price-to-cash-flow of 20.54 indicate the multiple is not cheap on a growth-adjusted basis, leaving limited re-rating room.
- Three Hold ratings cluster at current price: Barclays, Morgan Stanley, and Citigroup all sit at Equal Weight/Neutral, and the $646 low target is essentially at the current $663.63 price — a 'fairly valued' call. The $646–$915 target spread of roughly 42% signals genuine disagreement about the growth runway and valuation risk.
- Gross margin volatility and mix dependence: Gross margin fell to 40.61% in Q3 from 44.40% in Q2 and 42.84% in the prior-year Q3, showing sensitivity to product mix. While operating margin held up via lower SG&A, a sustained mix shift toward lower-margin programs could pressure the 20%+ operating margin narrative.
- Low beta limits upside participation: A beta of 0.877 means TDY is roughly 12% less volatile than the market, so it will not fully participate in broad risk-on rallies. The stock is also down 2.94% over three months despite the 7.53% one-month surge, reflecting a choppy mid-year tape and dependence on the late-October breakout holding.
TDY Technical Analysis
TDY is in a sustained uptrend that has recently reasserted itself after a mid-year consolidation. The stock is up 28.03% over the trailing year and 27.92% year-to-date, dramatically outpacing the S&P 500's 10.39% and 10.62% respective gains, with a relative strength of +17.64% over one year. At $663.63, the shares sit at roughly 90.4% of the 52-week range ($483.02 low to $697.67 high), positioning them in the upper decile of their annual band — a zone that historically signals momentum leadership but also leaves limited margin for disappointment before the prior high becomes the reference resistance.
Short-term momentum has turned decisively positive and is now diverging constructively from the choppy mid-year tape. The stock has gained 7.53% over the past month versus a -1.99% decline for SPY, a +9.52% relative strength spread, and is up 5.21% over six months, yet it remains down 2.94% over three months — a pattern consistent with a sharp late-October breakout (from roughly $620 on October 22 to $677.46 by October 29) following a summer pullback from the August high near $691. That three-month/one-month divergence reads as a completed mean-reversion correction rather than a trend reversal, with the October surge reclaiming the 50- and 200-day trend structure. Volume of roughly 275,000 shares is modest in absolute terms for a $24.5B market cap name, so the breakout's durability should be confirmed by follow-through volume.
Key technical levels are well defined: immediate resistance sits at the 52-week high of $697.67, roughly 5.1% above the current price, and a clean break above it would signal a fresh leg higher and likely trigger momentum-fund accumulation. Support is anchored by the 52-week low of $483.02 (27.2% below current levels) with intermediate support in the $600–$620 zone where the stock repeatedly found buyers in September and October. With a beta of 0.877, TDY is roughly 12% less volatile than the market, and its maximum drawdown of -18.39% over the period underscores a relatively shallow risk profile — supportive of larger position sizing for volatility-aware portfolios, though the low beta also means the stock will not fully participate in broad risk-on rallies.
Beta
0.88
0.88x market volatility
Max Drawdown
-18.4%
Largest decline past year
52-Week Range
$483-$698
Price range past year
Annual Return
+23.6%
Cumulative gain past year
| Period | TDY Return | S&P 500 |
|---|---|---|
| 1m | +2.0% | -1.0% |
| 3m | -8.1% | -0.2% |
| 6m | +1.7% | +4.0% |
| 1y | +23.6% | +13.6% |
| ytd | +21.8% | +12.4% |
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TDY Fundamental Analysis
Teledyne's revenue trajectory is one of steady, reaccelerating growth. Third-quarter fiscal 2026 revenue reached $1.685 billion, up 9.44% year-over-year from $1.540 billion, extending a streak of sequential increases from $1.560 billion in Q1 and $1.663 billion in Q2 and marking the strongest YoY growth in the dataset (versus 8.9% in Q2 and 7.6% in Q1). Digital Imaging remains the growth engine at $903 million, or roughly 54% of segment revenue, followed by Instrumentation at $370.5 million, Aerospace and Defense Electronics at $287.4 million, and Engineered Systems at $124 million; the imaging and defense franchises are clearly carrying the consolidated top line, and the record $5.3 billion funded backlog provides multi-quarter visibility that de-risks the forward growth case.
Profitability is robust and expanding. Q3 net income was $272.8 million on a 16.19% net margin, up from $220.7 million and a 14.34% margin a year earlier, while gross margin came in at 40.61% and operating margin at 20.61% — the latter up from 18.37% in the prior-year quarter and 18.86% in Q1 2026. The Q2 gross margin of 44.40% reflects favorable mix, and the sequential compression to 40.61% in Q3 was more than offset by lower operating expenses (SG&A of $258.4 million versus $404.9 million in Q2), producing a 20.6% operating margin that is at the high end of the company's recent band. EBITDA of $431.9 million (25.6% margin) and interest coverage of roughly 33x confirm that the earnings power is high-quality and not reliant on financial engineering.
Balance sheet and cash generation are strong. Debt-to-equity stands at just 0.251 with a current ratio of 1.64, and the company generated $1.148 billion in trailing free cash flow against $352.5 million of Q3 operating cash flow and only $33 million of capex — a capital-light model that funds growth internally. Q3 free cash flow of $319.5 million represented a 90.6% FCF conversion rate, and management retired $450.4 million of debt in Q2 while repurchasing $91.9 million of stock in Q3, evidencing genuine capital-return capacity. ROE of 8.51% and ROA of 5.31% look modest on a trailing basis but are depressed by the low leverage and large equity base; the cash-rich, low-debt profile means Teledyne has ample dry powder for its acquisition strategy without external financing risk.
Quarterly Revenue
$1.7B
2026-09
Revenue YoY Growth
+9.4%
YoY Comparison
Gross Margin
40.6%
Latest Quarter
Free Cash Flow
$1.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is TDY Overvalued?
Because Teledyne is solidly profitable (Q3 net income of $272.8 million), the PE ratio is the appropriate primary metric. The stock trades at 27.34x trailing earnings but only 23.93x forward earnings — a roughly 12.5% compression that implies the market expects meaningful EPS growth, consistent with the consensus fiscal 2026 EPS estimate of $34.49 and the company's demonstrated operating leverage. The PEG ratio of 3.29 and price-to-cash-flow of 20.54 suggest the multiple is not cheap on a growth-adjusted basis, but the forward discount indicates earnings delivery, not multiple expansion, is doing the heavy lifting.
Against the broader Technology sector, TDY screens as a relative value. Its 27.34x trailing PE and 4.00x price-to-sales are well below the premium multiples typical of high-growth tech, and its 4.91x EV/sales and 17.96x EV/EBITDA are reasonable for a diversified industrial-technology franchise with 20%+ operating margins and a defense/aerospace backlog. The 2.33x price-to-book is modest for a company generating 8.5% ROE, and the 39.2% gross margin and 14.6% net margin are consistent with a high-quality hardware and instrumentation business. On balance, TDY trades at a discount to the sector's growth leaders but at a premium to legacy industrial peers — a positioning justified by its above-market growth (9.4% YoY revenue) and lower beta (0.877).
Historically, the stock's valuation sits in the middle-to-upper portion of its own range. The trailing PE of 27.34x compares with a 2026 quarterly band of roughly 22.1x to 30.1x and a 2024–2025 range that dipped as low as 16.5x (Q4 2023) and peaked near 31.5x (Q4 2021); the current reading is therefore near the upper-middle of the multi-year band rather than at an extreme. Price-to-sales of 4.00x on the current market cap basis is far below the 15–18x levels recorded in the historical ratio series (which used a different share-count basis), so the more reliable signal is the PE: at 27x trailing and 24x forward, the market is pricing in continued mid-single-digit growth and margin durability, leaving modest room for re-rating but meaningful downside if growth decelerates toward the low single digits.
PE
27.3x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 17x~31x
vs. Industry Avg
37.3x
Industry PE ~37.3x*
EV/EBITDA
18.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on valuation dependence and margin mix. The stock trades at 27.34x trailing and 23.93x forward earnings with a PEG of 3.29, meaning the price requires continued mid-to-high single-digit growth to justify itself; a deceleration toward low single digits would compress the multiple toward the 22.1x low end of the 2026 band. Gross margin fell to 40.61% in Q3 from 44.40% in Q2 and 42.84% in the prior-year Q3, showing sensitivity to product mix, and revenue is concentrated in Digital Imaging at roughly $903M, or about 54% of segment revenue. Debt is not a concern at 0.251 debt-to-equity with 33x interest coverage, but the serial-acquisition model carries integration and impairment risk that is not visible in current metrics.
Market and competitive risks are dominated by valuation compression and sector rotation. At 90.4% of its 52-week range ($483.02–$697.67), the stock has limited cushion before the prior high becomes resistance, and the three Hold ratings (Barclays, Morgan Stanley, Citigroup) clustered near the current price reflect valuation discipline. A beta of 0.877 means TDY is roughly 12% less volatile than the market, which cushions drawdowns but also limits participation in risk-on rallies; the stock is down 2.94% over three months despite a 7.53% one-month gain, showing how quickly momentum can stall. Competitive disruption in high-performance sensors, infrared/X-ray imaging, and MEMS is a structural threat, and defense/aerospace exposure ties results to government budget cycles and procurement timing.
In a worst-case scenario, growth decelerates toward low single digits, gross margin stays near the 40.6% Q3 level, and the multiple compresses from 27.34x toward the 22.1x low end of the 2026 band — a combination that could take the stock toward the $646 analyst low target, roughly -2.6% from $663.63. A deeper de-rating toward the 52-week low of $483.02 would represent a loss of about -27.2% from the current price, consistent with the stock's -18.39% maximum drawdown over the period. The realistic downside range is therefore roughly -3% to -27%, with the 52-week low as the extreme reference point if both earnings and multiple disappoint simultaneously.
FAQ
Ranked by severity: first, valuation compression — at 27.34x trailing with a 3.29 PEG, a deceleration toward low single digits could compress the multiple toward 22.1x, and the 52-week low of $483.02 represents about -27% downside. Second, margin mix risk — gross margin fell to 40.61% in Q3 from 44.40% in Q2, and Digital Imaging at roughly $903M (about 54% of segment revenue) concentrates exposure, so an unfavorable mix shift could erode the 20%+ operating margin narrative. Third, growth durability and backlog conversion — consensus fiscal 2026 EPS of $34.49 depends on the $5.3B funded backlog converting on schedule, and defense procurement timing plus industrial demand softness could push organic growth below 5%. Fourth, macro and sector rotation — the 0.877 beta cushions drawdowns but limits rally participation, and the stock is already down 2.94% over three months despite a 7.53% one-month surge, showing how quickly momentum can stall.
The 12-month outlook splits into three scenarios. The base case carries 55% probability with a $697.67-$770.08 range, assuming revenue growth moderates to 7-8%, gross margin recovers toward the low-40s, and operating margin holds at or above 20%, delivering fiscal 2026 EPS near $34.49 on about $8.01B revenue. The bull case at 25% probability targets $770.08-$915.00, requiring organic growth at or above 9%, operating margin above 21%, and a volume-confirmed break above the 52-week high that re-rates the stock toward the mid-30s PE. The bear case at 20% probability spans $483.02-$646.00, driven by growth slipping below 5% and multiple compression toward 22.1x. The base case is most likely, and its key assumption is that the record $5.3B backlog converts on schedule while margins stay above 20%.
TDY looks fairly valued to modestly undervalued relative to its own history and cheap relative to premium tech peers. The 27.34x trailing PE sits in the upper-middle of its 22.1x-30.1x multi-year band, well above the 16.5x trough in Q4 2023 but below the ~31.5x peak in Q4 2021, so it is not at an extreme. The forward multiple of 23.93x represents roughly 12.5% compression from trailing, implying the market expects real EPS growth toward the $34.49 consensus, and the 4.00x price-to-sales and 17.96x EV/EBITDA are modest for a business with 39.2% gross and 14.6% net margins. The 3.29 PEG is the caution flag — the market is paying up on a growth-adjusted basis. Overall, the price implies continued mid-to-high single-digit growth and durable 20%+ operating margins; it is not a bargain, but it is a reasonable price for a 9% grower with a fortress balance sheet.
From a risk/reward standpoint, TDY offers a moderately favorable setup: the $770.08 average analyst target implies about +16.0% upside from $663.63, backed by 9 Buy versus 3 Hold and zero Sell ratings, while the $646 low target sits essentially at the current price — meaning the downside skew to consensus is limited. The fundamental engine is intact, with Q3 2026 revenue up 9.44% YoY, operating margin at 20.61%, and $1.148B of trailing free cash flow at 90.6% conversion. The main offset is valuation: 27.34x trailing and 23.93x forward earnings with a 3.29 PEG leave little cushion, and a de-rating toward the 22.1x band low could take the stock to the $483.02 52-week low, roughly -27%. It is a reasonable buy for patient, quality-oriented investors with a multi-year horizon who can tolerate a 10-15% drawdown, but less attractive for traders seeking immediate multiple-driven upside.
TDY is better suited to long-term holding than short-term trading. It is a mature, low-beta (0.877) compounder with no dividend, so total return depends on earnings growth plus modest multiple change rather than income or momentum, and its 9.44% revenue growth and 20.61% operating margin are best harvested over multiple quarters of backlog conversion. Earnings visibility is high given the $5.3B funded backlog and 12-analyst coverage, which reduces the risk of violent single-quarter surprises, but the 27.34x trailing multiple means near-term upside is capped and short-term traders face choppy action — the stock fell from $691.30 in early August to $595.23 by September 9 before rebounding to $677.46 by October 29. A minimum holding period of 2-3 years is appropriate to let EPS compounding toward the $34.49 consensus and further acquisitions play out; short-term traders should instead key off the $697.67 resistance and $600-$620 support levels.