TDY

Based on the provided analysis, here is a comprehensive breakdown of Teledyne Technologies (TDY).

Technical Analysis The stock shows encouraging short-term momentum with a 6% monthly gain, suggesting recent positive sentiment. However, it still underperforms the broader market over a three-month period and remains below its 52-week high. With average market volatility and a position in the upper-middle of its yearly range, the technical picture is neutral, indicating a lack of strong directional momentum.

Fundamental Analysis TDY's fundamentals are solid, featuring steady revenue growth and strong, stable profitability with excellent margins. The company is in good financial health, supported by low debt and robust cash flow. While these core business metrics are positive, operational efficiency shows room for improvement, particularly in managing working capital.

Valuation & Risk The most significant concern is valuation. Key metrics like P/E and PEG ratios are substantially elevated, indicating the stock is priced for near-perfect execution of future growth. This creates high vulnerability if results disappoint. Risks are manageable, with volatility in line with the market, but the primary risk is the premium valuation itself.

Investment Recommendation

TDY is a high-quality company with strong foundational finances, but its current stock price appears to fully reflect this optimism. The significant overvaluation, highlighted by a PEG ratio near 6.0, outweighs the positive technical momentum and solid fundamentals. For new money, the risk/reward profile is currently unfavorable; it would be more prudent to wait for a more attractive entry point during a market pullback. This is not investment advice, for reference only.

RockFlow Model Forecast: Three Scenarios for 2026

Here is a 12-month outlook for Teledyne Technologies (TDY):

12-Month Outlook for TDY

The primary catalyst for TDY will be its ability to meet or exceed high growth expectations, particularly in its marine, instrumentation, and digital imaging segments, to justify its premium valuation. Key risks are almost entirely centered on valuation; any earnings disappointment or sector-wide de-rating could trigger a significant correction given the stock's elevated P/E and PEG ratios. While no specific analyst targets were provided, the risk/reward appears skewed to the downside from the current price near $555, suggesting a cautious outlook with a potential trading range that could see a pullback to more historically sustainable valuation levels if growth momentum falters.

Wall Street Consensus

Most Wall Street analysts are optimistic about TDY's 12-month outlook, with consensus target around $562.54, indicating expected upside potential.

Overall, TDY has investment potential but also faces challenges. Here are key factors to weigh before investing.

Overall Assessment TDY demonstrates mixed performance with recent strength but longer-term weakness, currently trading -6.9% below its 52-week high despite a solid monthly gain.

Short-term Performance The stock has shown strong recent momentum with a 6.1% 1-month gain, though this follows a challenging 3-month period where it declined -3.72%. While the monthly performance is encouraging, TDY has underperformed the broader market by -7.09% over the past three months, indicating relative weakness compared to sector peers or benchmark indices.

Current Position Trading at $555.01, TDY sits in the upper-middle portion of its 52-week range ($419-$595.99), approximately 32% above its low but still below the midpoint of the range. With a beta near 1.0, the stock exhibits market-average volatility, and the modest recovery from its -18.39% maximum drawdown suggests it is neither strongly overbought nor oversold at current levels.

Revenue & Profitability TDY demonstrated solid sequential revenue growth from Q2 to Q3 2025, increasing from $1.51 billion to $1.54 billion. Profitability remained strong with a gross profit margin of 42.8% and a net profit margin of 14.3%, reflecting efficient cost control and stable earnings conversion from revenue.

Financial Health The company maintains a conservative capital structure, evidenced by a low debt-to-equity ratio of 0.24 and a healthy current ratio of 1.79. Interest coverage of 22.4 indicates ample EBIT to service debt, while cash flow from operations comfortably supports ongoing obligations.

Operational Efficiency Operational performance is adequate, with return on equity at 2.1% and asset turnover of 0.10, suggesting moderate efficiency in generating sales from its asset base. The cash conversion cycle of 139 days indicates room for improvement in working capital management, particularly in inventory and receivables turnover.

Analysis of TDY's Valuation

Valuation Level: TDY's current valuation metrics suggest it is significantly overvalued. The trailing P/E of 32.24 and forward P/E of 30.78 are both elevated, indicating high expectations for future earnings that may not be sustainable. The P/B ratio of 2.44 and P/S ratio of 4.39 further support this view, as they reflect a premium price relative to the company's book value and sales. The extremely high EV/EBITDA of 78.66 and a PEG ratio of nearly 6.00, which far exceeds the ideal level of 1.0, highlight substantial overvaluation and poor growth-adjusted value.

Peer Comparison: Without specific industry average data, a precise peer comparison cannot be conducted. However, given TDY's elevated P/E ratios and PEG ratio well above 1.0, it is likely trading at a premium compared to typical industry norms. The high P/S and EV/EBITDA ratios further suggest that TDY's valuation is stretched relative to sector peers, indicating potential vulnerability if growth expectations are not met.

Volatility Risk: TDY exhibits Beta slightly above 1 (1.027), aligning closely with market movements while introducing minor amplified volatility. The 1-year maximum drawdown of -18.39% reflects moderate downside risk, suggesting susceptibility to broader market downturns but remaining within reasonable bounds for comparable equities.

Other Risks: Notably absent short interest eliminates immediate pressure from bearish speculation but warrants monitoring for shifts in market sentiment. While liquidity is not explicitly quantified, typical mid-cap characteristics imply adequate trading volume, though large positions may face execution challenges during volatile periods.