Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Teradyne, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 32.1% to -3.7% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 64, DPO 50, DIO 190). At a 9.3% WACC with mid-year discounting, the terminal value (91% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 32.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $241.07 per share, suggesting TER is overvalued by 20.1% at the current price of $301.60.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,034 | 1,232 | 1,451 | 1,398 | 1,347 | 1,381 |
| (−) Net Interest | 9 | 11 | 13 | 13 | 12 | 13 |
| (+) D&A | 175 | 197 | 223 | 259 | 285 | 292 |
| EBITDA | 1,219 | 1,441 | 1,687 | 1,670 | 1,644 | 1,685 |
| (−) Tax | 133 | 159 | 187 | 180 | 174 | — |
| (−) CapEx | 242 | 289 | 340 | 328 | 316 | — |
| (−) ΔWC | 524 | 270 | 298 | -72 | -70 | — |
| Free Cash Flow (FCF) | 320 | 723 | 862 | 1,234 | 1,224 | — |
| Peers' EBITDA Multiple | 32.1x | |||||
| Terminal Value | 54,066 | |||||
| WACC / Discount Rate | 9.27% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 306 | 633 | 690 | 905 | 821 | 34,700 |
| Enterprise Value | 38,055 | |||||
| Projection Period | 3,355 | 8.8% | ||||
| Terminal Value | 34,700 | 91.2% | ||||
| (−) Current Net Debt | 53 | |||||
| Equity Value | 38,002 | |||||
| (÷) Outstanding Shares | 158M | |||||
| Fair Price | $241 | -20.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 28.1x | 30.1x | 32.1x | 34.1x | 36.1x |
|---|---|---|---|---|---|
| 7.3% | $233 | $248 | $264 | $279 | $294 |
| 8.3% | $223 | $238 | $252 | $266 | $281 |
| 9.3% | $214 | $227 | $241 | $255 | $269 |
| 10.3% | $204 | $218 | $231 | $244 | $257 |
| 11.3% | $196 | $208 | $221 | $233 | $246 |
Current price: $301.60. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.