Contrasting Exfo (EXFO) & Teradyne (TER)

Exfo (NASDAQ: EXFO) and Teradyne (NYSE:TER) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Dividends

Teradyne pays an annual dividend of $0.36 per share and has a dividend yield of 1.0%. Exfo does not pay a dividend. Teradyne pays out 15.4% of its earnings in the form of a dividend. Teradyne has increased its dividend for 3 consecutive years.

Earnings and Valuation

This table compares Exfo and Teradyne’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Exfo $243.30 million 0.79 $850,000.00 $0.21 16.67
Teradyne $2.14 billion 3.46 $257.69 million $2.34 16.16

Teradyne has higher revenue and earnings than Exfo. Teradyne is trading at a lower price-to-earnings ratio than Exfo, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

12.1% of Exfo shares are owned by institutional investors. Comparatively, 96.2% of Teradyne shares are owned by institutional investors. 20.0% of Exfo shares are owned by insiders. Comparatively, 0.5% of Teradyne shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

Exfo has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Teradyne has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Exfo and Teradyne, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exfo 0 4 1 0 2.20
Teradyne 0 6 8 0 2.57

Exfo presently has a consensus price target of $5.30, indicating a potential upside of 51.43%. Teradyne has a consensus price target of $46.67, indicating a potential upside of 23.39%. Given Exfo’s higher probable upside, analysts plainly believe Exfo is more favorable than Teradyne.

Profitability

This table compares Exfo and Teradyne’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Exfo -2.18% 4.49% 3.25%
Teradyne 11.97% 23.45% 15.38%

Summary

Teradyne beats Exfo on 13 of the 17 factors compared between the two stocks.

About Exfo

EXFO Inc. develops, manufactures, and markets smarter network test, monitoring, and analytics solutions for communications service providers, network equipment manufacturers, and Webscale companies. It offers lab and manufacturing testing systems, including lab platforms; network simulation and load testing tools to meet the mobile telecom and VOIP/IMS network test challenges; transport and datacom solutions, such as Ethernet testing, fiber channel testing, DSn/PDH and SONET/SDH testing, synchronization testing, and SONET/SDH, OTN, and multiservice testing solutions; and optical products comprising power meters, light sources and amplifiers, variable attenuators, switch and utility modules, polarization analysis, optical communication analyzers, spectral testing products, bit-error-rate testing products, optical benchtop kits, osics multifunction platform, optical component testers, and tunable filters. The company also provides field network testing products, including FTB Ecosystem test tools; FTB platforms; test function virtualization solutions; transport and datacom solutions designed to address DSn/PDH and SONET/SDH, carrier Ethernet, testing needs; optical instruments; copper access/triple-play handheld instruments to assess the quality of access network physical layer and performance of multiplay services; mobile broadband tools to meet mobile telecom network test challenges; and wireless network testing solutions. In addition, it offers service assurance platforms, fiber network monitoring and management solutions, and remote network monitoring solutions; and solutions for FTTx access networks and metro/core networks, as well as technical support, instrument, and system services. The company sells products through its direct sales force, sales representatives, and distributors in the United States, Canada, and others. EXFO Inc. was founded in 1985 and is headquartered in Quebec, Canada. EXFO Inc. is a subsidiary of G. Lamonde Investissements Financiers Inc.

About Teradyne

Teradyne, Inc. designs, develops, manufactures, sells, and supports automatic test equipment worldwide. Its Semiconductor Test segment offers semiconductor test products and services for wafer level and device package testing in automotive, industrial, communications, consumer, computer and electronic game, and other applications. This segment offers FLEX test platform systems; J750 test system to address the highest volume semiconductor devices; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for use by semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. This segment serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and outsourced semiconductor assembly and test providers. The company's System Test segment offers defense/aerospace test instrumentation and systems; storage test systems; and circuit-board test and inspection systems. Its Industrial Automation segment provides collaborative robots for manufacturing and light industrial customers. The company's Wireless Test segment provides test solutions for use in the development and manufacture of wireless devices, smart phones, tablets, notebooks, laptops, peripherals, and Internet-of-Things (IoT) devices under the LitePoint brand name. This segment offers IQxel products for Wi-Fi and other standards; IQxstream solution for testing GSM, EDGE, CDMA2000, TD-SCDMA, WCDMA, HSPA+, LTE-FDD, TD_LTE, and LTE-A technologies; modular wireless test instruments for design verification test and production testing of wireless components; lab-in-a-box zSeries solution for design verification of RF power amplifier and smart device RF front end modules; and test software for wireless chipsets. The company was founded in 1960 and is headquartered in North Reading, Massachusetts.

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