Teledyne Technologies
TDY
$597.11
-1.11%
Teledyne Technologies Incorporated is a provider of enabling technologies that sense, analyze, and distribute information for industrial growth markets requiring advanced technology and high reliability, operating across four segments: Digital Imaging, Instrumentation, Aerospace and Defense Electronics, and Engineered Systems, with Digital Imaging generating the largest share of revenue. The company occupies a distinctive position as a diversified, high-margin industrial technology conglomerate with deep exposure to defense, space, medical imaging, and industrial automation niches, rather than competing as a broad-based platform or consumer-facing disruptor. The current investor narrative centers on Teledyne's ability to sustain mid-single-digit organic growth while integrating acquisitions and expanding margins, with recent quarterly results showing revenue growth of roughly 7.6% year-over-year and improving profitability. Debate among investors focuses on whether the company's premium valuation and modest relative underperformance versus the broader market are justified by its defense and imaging franchise, particularly as defense budgets and industrial capital spending cycles remain key swing factors.…
TDY
Teledyne Technologies
$597.11
Investment Opinion: Should I buy TDY Today?
Rating: Hold. Teledyne is a high-quality, diversified industrial technology company with a fortress balance sheet and consistent mid-single-digit growth, but the current valuation of 27.34x trailing earnings and a PEG of 3.29x adequately reflects these strengths. The analyst consensus average target of $757.25 implies 25.4% upside, but the lack of a formal recommendation score and the prevalence of Neutral ratings from major firms suggest the stock is fairly valued near current levels, with upside contingent on execution.
The supporting evidence for a Hold is balanced. On the positive side, revenue grew 7.6% year-over-year in Q1 2026, operating margin expanded to 18.86% from 17.88%, and free cash flow of $1.05 billion comfortably covers capital expenditures of just $29.7 million per quarter. The balance sheet is conservative with debt-to-equity of 0.251 and $521.4 million in cash, providing ample firepower for acquisitions. However, the gross margin contraction to 39.50% from 42.73% a year ago is a yellow flag, and the stock's -20.90 percentage point six-month relative underperformance versus the S&P 500 indicates waning momentum. The forward PE of 22.59x is reasonable relative to the company's own history but not cheap relative to its 7.6% growth rate.
The biggest risks that could invalidate the Hold rating are a continued decline in gross margins below 38%, a slowdown in defense spending that pressures the Aerospace and Defense Electronics segment ($277.5 million in Q1 revenue), and a broader market rotation out of premium-valued industrial names. The rating would upgrade to Buy if gross margins stabilize above 40% and the stock reclaims its 50-day moving average, or if the forward PE compresses below 20x without a deterioration in fundamentals. Conversely, a downgrade to Sell would be warranted if revenue growth decelerates below 5% or if operating margins fall below 17%. Relative to its history and peers, the stock appears fairly valued to slightly overvalued, with the market pricing in steady execution rather than heroic growth.
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TDY 12-Month Price Forecast
Teledyne presents a balanced risk/reward profile with a neutral stance. The company's 7.6% revenue growth, expanding operating margins, and fortress balance sheet are offset by a premium valuation (27.34x trailing PE, 3.29x PEG) and recent gross margin compression. The stock's -20.90 percentage point six-month relative underperformance versus the S&P 500 suggests it is out of favor, but the 0.908 beta and moderate short ratio of 3.27 indicate limited downside from here. The wide analyst target range of $640 to $877 reflects genuine uncertainty about defense spending and industrial demand. I would upgrade to bullish if gross margins stabilize above 40% and the stock reclaims $650, or downgrade to bearish if revenue growth falls below 5% or operating margins drop below 17%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Teledyne Technologies's 12-month outlook, with a consensus price target around $757.25 and implied upside of +26.8% versus the current price.
Average Target
$757.25
0 analysts
Implied Upside
+26.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$640 - $877
Analyst target range
Teledyne is covered by 12 analysts, with a consensus average target price of $757.25, implying approximately +25.4% upside from the current price of $603.79. The recommendation field is listed as "none," but the institutional ratings history shows a mix of Buy and Neutral/Equal Weight stances: Stifel, Needham, and Jefferies maintain Buy ratings, while Citigroup, Barclays, and Morgan Stanley carry Neutral or Equal Weight ratings, indicating a moderately bullish but not overwhelmingly conviction-driven consensus. The consensus leans constructive, with the average target well above the current price, but the absence of a formal recommendation score and the prevalence of Equal Weight ratings suggest analysts see the stock as fairly valued near current levels with upside contingent on execution.
The target range spans from a low of $640.00 to a high of $877.00, a spread of $237 or roughly 37% of the low target, signaling meaningful dispersion in analyst views. The high target of $877 implies roughly +45% upside and likely assumes multiple expansion, accelerating defense and imaging demand, successful acquisition integration, and margin recovery toward the 20%+ operating margin levels seen in Q4 2025. The low target of $640 implies only about +6% upside and appears to price in modest growth, stable but unspectacular margins, and limited multiple expansion, essentially a hold scenario. The wide spread reflects genuine uncertainty around defense budget cycles, industrial demand, and the company's ability to sustain its premium valuation, and the recent pattern of ratings shows no upgrades or downgrades in 2026, suggesting analysts are in a wait-and-see mode pending clearer evidence of accelerating growth or margin improvement.
Bulls vs Bears: TDY Investment Factors
The bear case currently has stronger near-term evidence given the stock's 12% one-month decline, -20.9 percentage point six-month relative underperformance, and gross margin compression to 39.5%. However, the bull case rests on more durable fundamentals: 7.6% revenue growth, expanding operating margins, a fortress balance sheet with 0.251 debt-to-equity, and a consensus target implying 25.4% upside. The single most important tension is whether the gross margin decline is a temporary mix issue or a structural erosion of pricing power; if gross margins stabilize above 40%, the forward PE of 22.59x looks attractive, but if they continue falling, the premium multiple is unjustified. The stock's 0.908 beta and moderate short ratio suggest the sell-off may be overdone, but momentum traders should wait for a reclaim of the $620-$630 level before turning constructive.
Bullish
- Consensus target implies 25% upside: The 12-analyst consensus average target price of $757.25 implies approximately +25.4% upside from the current price of $603.79. Even the lowest analyst target of $640.00 sits about 6% above the current price, indicating that no covering analyst sees material downside from here.
- Revenue growth accelerating with margin expansion: Q1 2026 revenue of $1.56 billion grew 7.6% year-over-year, while operating margin expanded to 18.86% from 17.88% a year earlier and net margin rose to 14.54% from 13.01%. This combination of top-line growth and operating leverage demonstrates the company is scaling profitably.
- Fortress balance sheet with strong cash generation: Debt-to-equity of just 0.251 and a current ratio of 1.64 provide substantial financial flexibility, while trailing twelve-month free cash flow of $1.05 billion and interest coverage of 23.9x underscore the quality of earnings. The company repurchased $400 million of stock in Q4 2025, signaling confidence in its own valuation.
- Forward PE below historical average: The forward PE of 22.59x is near the low end of the stock's historical trailing PE range of roughly 16.5x to over 30x, implying that if consensus EPS of $28.74 materializes, the stock is reasonably valued relative to its own history. The gap between trailing PE of 27.34x and forward PE of 22.59x implies the market expects roughly 21% earnings growth.
Bearish
- Severe recent underperformance versus market: The stock has fallen 12.05% over the past month and 5.50% over six months, while the S&P 500 gained 15.4% over six months, resulting in relative strength of -20.90 percentage points. This sharp divergence suggests institutional rotation out of the name and deteriorating momentum.
- Gross margin compression threatens profitability: Gross margin declined to 39.50% in Q1 2026 from 42.73% in Q1 2025 and 42.84% in Q3 2025, a nearly 330 basis point year-over-year contraction. If this mix-driven pressure persists, it could offset operating leverage and cap earnings growth below consensus expectations.
- Elevated PEG ratio signals growth mismatch: The PEG ratio of 3.29x is well above 1.0, indicating the stock is expensive relative to its growth rate. With revenue growing at only 7.6% year-over-year, the market is paying a premium multiple for mid-single-digit growth, leaving little room for execution missteps.
- Analyst consensus lacks conviction: Despite the bullish average target, the recommendation field is 'none' and several major firms including Citigroup, Barclays, and Morgan Stanley carry Neutral or Equal Weight ratings. The wide target range from $640 to $877 (a 37% spread) reflects genuine uncertainty about defense budgets and industrial demand.
TDY Technical Analysis
Teledyne shares are in a broad range-bound consolidation with a modest upward bias over the trailing year, posting a 1-year price change of +6.66% and a year-to-date gain of +16.39%, though the stock has given back ground recently. At the current price of $603.79, the stock sits at approximately 86.4% of its 52-week range (low of $483.02, high of $697.67), meaning it is trading in the upper portion of its annual band but well off the highs. This positioning suggests the stock retains a constructive longer-term structure but lacks the momentum characteristic of a breakout, leaving it vulnerable to further mean reversion toward the middle of the range. The 52-week range spans roughly $214.65, or about 44% of the low, indicating meaningful volatility within the band even as the net annual change remains modest.
Short-term momentum has deteriorated sharply, with the 1-month price change at -12.05% and the 3-month change at -3.55%, a clear deceleration from the positive 1-year and YTD trends. This divergence is notable: the stock is down double digits over the past month while still up 6.66% over the year, signaling a potential trend reversal or at minimum a significant corrective pullback within the broader range. Relative strength versus the S&P 500 confirms the weakness, with 1-month relative strength of -10.99 percentage points and 6-month relative strength of -20.90 percentage points, meaning Teledyne has materially lagged the market over the past six months even as its YTD relative strength remains slightly positive at +4.31 points. The recent decline from the August high of $691.30 to the September low of $595.23 represents a drawdown of roughly 13.9% in under a month, underscoring the severity of the near-term selling pressure.
Key technical support rests near the 52-week low of $483.02, with intermediate support around the recent September low of $595.23, while resistance is defined by the 52-week high of $697.67 and the August swing high of $691.30. A decisive breakout above $697.67 would signal renewed momentum and likely open the door to new highs, whereas a breakdown below $595 could accelerate selling toward the $550-$570 zone and potentially test the 52-week low. The stock's beta of 0.908 indicates it is slightly less volatile than the broader market, which is somewhat reassuring for risk management but also means the stock may lag in strong up-markets; the maximum drawdown of -18.39% over the period further contextualizes the downside risk, and with a short ratio of 3.27, there is a moderate but not extreme bearish positioning that could fuel a squeeze on any positive catalyst.
Beta
0.91
0.91x market volatility
Max Drawdown
-18.4%
Largest decline past year
52-Week Range
$483-$698
Price range past year
Annual Return
+7.3%
Cumulative gain past year
| Period | TDY Return | S&P 500 |
|---|---|---|
| 1m | -12.1% | -2.0% |
| 3m | -5.2% | +1.4% |
| 6m | -5.8% | +15.0% |
| 1y | +7.3% | +15.7% |
| ytd | +15.1% | +11.6% |
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TDY Fundamental Analysis
Teledyne's revenue trajectory remains solidly positive, with the most recent quarter (Q1 2026, ended March 29, 2026) delivering $1.56 billion in revenue, representing 7.6% year-over-year growth versus the $1.45 billion reported in Q1 2025. The multi-quarter trend shows consistent sequential and annual expansion: revenue rose from $1.51 billion in Q2 2025 to $1.54 billion in Q3 2025 to $1.61 billion in Q4 2025 before settling at $1.56 billion in Q1 2026, with the Q4 2025 figure representing a notable sequential peak. Segment data indicates Digital Imaging is the largest contributor at $816.9 million, followed by Instrumentation at $361.4 million, Aerospace and Defense Electronics at $277.5 million, and Engineered Systems at $104.3 million, with the imaging and instrumentation franchises providing the core growth engine. The steady mid-single-digit growth profile implies a durable but not explosive investment case, dependent on defense spending, medical imaging demand, and industrial automation cycles.
Profitability is robust and improving, with Q1 2026 net income of $226.8 million on a net margin of 14.54%, up from $188.6 million and a 13.01% net margin in the year-ago quarter. Gross margin in Q1 2026 was 39.50%, though this reflects a decline from the 42.73% reported in Q1 2025 and the 42.84% in Q3 2025, suggesting some gross margin compression likely tied to mix or cost inflation. Operating margin stood at 18.86% in Q1 2026, improving from 17.88% a year earlier, and EBITDA margin was 24.24%, indicating that operating leverage and cost control are offsetting gross margin pressure. The company's net margin of 14.63% (per valuation data) and operating margin of 18.80% are healthy for a diversified industrial technology firm, and the consistent profitability across all recent quarters reinforces the quality of earnings.
Teledyne's balance sheet is conservatively positioned, with a debt-to-equity ratio of just 0.251 and a current ratio of 1.64, indicating ample liquidity and modest leverage. Free cash flow on a trailing twelve-month basis is $1.05 billion, and Q1 2026 free cash flow was $204.3 million on operating cash flow of $234.0 million, with capital expenditures of only $29.7 million, reflecting the asset-light nature of its businesses. Return on equity is 8.51% and return on assets is 5.14%, which are moderate but reflect the company's large acquisition-related intangible base; the cash flow to debt ratio of 0.094 and interest coverage of 23.9x highlight strong debt-servicing capacity. With $521.4 million in cash at the end of Q1 2026 and no dividend payout, Teledyne retains substantial financial flexibility to fund acquisitions and buybacks internally, as evidenced by the $400 million in stock repurchased in Q4 2025.
Quarterly Revenue
$1.6B
2026-03
Revenue YoY Growth
+7.6%
YoY Comparison
Gross Margin
39.5%
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 with positive net income of $226.8 million in the most recent quarter, the PE ratio is the appropriate primary valuation metric. The stock trades at a trailing PE of 27.34x and a forward PE of 22.59x, with the gap between the two implying the market expects meaningful earnings growth over the next twelve months, consistent with the consensus EPS estimate of $28.74 versus trailing EPS of $0.0366 (which appears distorted by a data anomaly, as quarterly diluted EPS was $4.85). The forward PE of 22.59x on estimated EPS of $28.74 suggests the market is pricing in roughly 21% earnings growth, a reasonably optimistic but not aggressive assumption for a company growing revenue at 7.6%.
Relative to the broader Technology sector, Teledyne's valuation appears moderate: its PS ratio of 4.00x and EV/EBITDA of 17.96x are below the multiples typically commanded by high-growth software and semiconductor peers, reflecting its more mature industrial technology profile. The PEG ratio of 3.29x is elevated, suggesting the stock is not cheap relative to its growth rate, while the price-to-book of 2.33x is modest and the price-to-cash-flow of 20.54x is reasonable. Without a specific industry average provided in the valuation data, the most defensible read is that Teledyne trades at a slight premium to diversified industrial technology peers on earnings but at a discount to pure-play defense electronics and high-end imaging companies, a positioning that seems broadly justified by its diversified, high-margin, cash-generative business model.
Historically, Teledyne's PE ratio has ranged from roughly 16.5x (Q4 2023) to over 30x (multiple quarters in 2025 and Q1 2026), with the current trailing PE of 27.34x sitting in the upper-middle portion of that band. The PS ratio of 4.00x is well below the 13x-17x range seen in historical quarterly data, though that discrepancy likely reflects a change in share count or data methodology rather than a true valuation collapse. The forward PE of 22.59x is near the lower end of the historical trailing PE range, implying that if earnings materialize as expected, the stock is reasonably valued relative to its own history. The market appears to be pricing in steady execution rather than heroic growth, leaving room for multiple expansion if margins and defense demand surprise to the upside.
PE
27.3x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 17x~37x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.0x
Enterprise Value Multiple
Investment Risk Disclosure
Teledyne's financial risk profile is relatively benign but not without vulnerabilities. The debt-to-equity ratio of 0.251 and current ratio of 1.64 indicate modest leverage and ample liquidity, while interest coverage of 23.9x provides a substantial cushion. However, the gross margin decline from 42.73% in Q1 2025 to 39.50% in Q1 2026 represents a 323 basis point contraction that, if sustained, would pressure earnings despite operating margin expansion to 18.86%. Additionally, the company's return on equity of 8.51% and return on assets of 5.14% are moderate, reflecting a large acquisition-related intangible base that could lead to impairment charges if acquired businesses underperform. With no dividend and a payout ratio of 0%, capital allocation depends entirely on the success of acquisitions and buybacks, introducing execution risk.
Market and competitive risks are significant given the stock's premium valuation and recent underperformance. The trailing PE of 27.34x and PEG of 3.29x leave little room for error, and the stock's -20.90 percentage point six-month relative strength versus the S&P 500 suggests it is out of favor. A beta of 0.908 means the stock is slightly less volatile than the market, but this also means it may lag in strong up-markets, as evidenced by its 6.66% one-year gain versus the S&P 500's 16.22% return. Competitive threats in digital imaging and defense electronics come from larger players like FLIR (now part of Teledyne) and smaller agile innovators, while defense budget cycles and industrial capital spending remain key swing factors. The absence of recent news in the dataset limits visibility into emerging threats, but the wide analyst target range of $640 to $877 signals genuine disagreement about the growth trajectory.
The worst-case scenario would involve a simultaneous deterioration in defense spending, a continued slide in gross margins below 38%, and a broader market rotation out of industrial technology names. In this scenario, the stock could retest its 52-week low of $483.02, representing a decline of approximately 20% from the current price of $603.79. If analyst estimates are revised downward and the forward PE compresses to 18x on lower EPS of $26, the stock could fall to the $468-$500 range, a loss of 17-22%. The maximum drawdown over the past year was -18.39%, and a repeat of that magnitude from the current price would take the stock to roughly $493, near the 52-week low. Investors should be prepared for a potential 20-25% drawdown in a severe bear case, with the first support at $595.23 and stronger support at $550-$570.
FAQ
The most severe risk is gross margin compression, which has seen gross margin fall from 42.73% in Q1 2025 to 39.50% in Q1 2026, a 323 basis point decline that threatens profitability. Second is defense budget risk, as the Aerospace and Defense Electronics segment generated $277.5 million in Q1 2026 revenue and is vulnerable to sequestration or continuing resolutions. Third is valuation risk, with a PEG of 3.29x and trailing PE of 27.34x leaving little room for error if growth slows. Fourth is competitive risk in digital imaging, where the company faces pressure from larger players and agile innovators. These risks are ranked from most to least severe, with gross margin compression being the most immediate threat to the investment thesis.
The 12-month forecast includes three scenarios: a base case with 50% probability targeting $640-$757, a bull case with 25% probability targeting $757-$877, and a bear case with 25% probability targeting $483-$595. The base case assumes revenue growth of 6-8%, operating margins near 19%, and a forward PE of 22-24x, consistent with the analyst average target of $757.25. The bull case requires defense budget upside and gross margin recovery above 41%, while the bear case assumes defense cuts and gross margin decline below 38%. The most likely scenario is the base case, with the key assumption being that Teledyne maintains its current growth trajectory and margin profile without major macroeconomic disruptions.
TDY appears fairly valued to slightly overvalued on most metrics. The trailing PE of 27.34x is in the upper-middle portion of its historical range of 16.5x to over 30x, while the forward PE of 22.59x is near the lower end, implying the market expects roughly 21% earnings growth. The PEG ratio of 3.29x is elevated and suggests the stock is expensive relative to its 7.6% revenue growth rate. Compared to the broader Technology sector, the PS ratio of 4.00x and EV/EBITDA of 17.96x are moderate, reflecting Teledyne's mature industrial profile. The market is pricing in steady execution rather than heroic growth, leaving room for multiple expansion if margins and defense demand surprise to the upside.
From a risk/reward perspective, TDY is a reasonable buy for long-term investors seeking exposure to defense and industrial technology, but it is not a compelling short-term trade. The analyst consensus target of $757.25 implies 25.4% upside, and the forward PE of 22.59x is near the low end of the stock's historical range. However, the biggest downside risk is a continued gross margin decline below 38%, which could trigger a de-rating to 18x forward earnings and a drop toward the 52-week low of $483.02, representing a 20% loss. The stock is a good buy for patient investors with a 2-3 year horizon who can tolerate a potential 15-20% drawdown, but traders should wait for a reclaim of the $620-$630 level before entering.
TDY is better suited for long-term investment given its beta of 0.908, consistent free cash flow generation of $1.05 billion trailing twelve months, and lack of a dividend (payout ratio 0%). The company's growth stage is mature, with revenue growing at 7.6% year-over-year, and earnings visibility is moderate given defense budget cycles. Short-term trading is less attractive due to the stock's recent 12.05% one-month decline and -20.90 percentage point six-month relative underperformance, which suggests momentum is negative. A suggested minimum holding period is 2-3 years to allow for acquisition integration, margin stabilization, and potential multiple expansion. The stock's low volatility relative to the market makes it suitable for conservative portfolios seeking defense and industrial technology exposure.