Does Teledyne Technologies (NYSE:TDY) Deserve A Spot On Your Watchlist?

Stock Analysis

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Teledyne Technologies (NYSE:TDY). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Check out our latest analysis for Teledyne Technologies

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Teledyne Technologies has grown EPS by 13% per year. That's a good rate of growth, if it can be sustained.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Teledyne Technologies achieved similar EBIT margins to last year, revenue grew by a solid 7.7% to US$5.5b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Teledyne Technologies' future profits.

Since Teledyne Technologies has a market capitalisation of US$19b, we wouldn't expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$256m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, you'd argue that they are indeed. The median total compensation for CEOs of companies similar in size to Teledyne Technologies, with market caps over US$8.0b, is around US$12m.

The Teledyne Technologies CEO received US$8.4m in compensation for the year ending January 2023. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

One positive for Teledyne Technologies is that it is growing EPS. That's nice to see. The growth of EPS may be the eye-catching headline for Teledyne Technologies, but there's more to bring joy for shareholders. With a meaningful level of insider ownership, and reasonable CEO pay, a reasonable mind might conclude that this is one stock worth watching. Now, you could try to make up your mind on Teledyne Technologies by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

What are the risks and opportunities for Teledyne Technologies?

NYSE:TDY

Teledyne Technologies

Teledyne Technologies Incorporated, together with its subsidiaries, provides enabling technologies for industrial growth markets in the United States, Canada, the United Kingdom, France, and internationally.Show more

Rewards

Earnings are forecast to grow 6.65% per year

Earnings grew by 32% over the past year

Risks

No risks detected for TDY from our risks checks.

Share Price

Market Cap

1Y Return

Further research onTeledyne Technologies

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Teledyne Technologies Incorporated, together with its subsidiaries, provides enabling technologies for industrial growth markets in the United States, Canada, the United Kingdom, France, and internationally.

Solid track record with excellent balance sheet.