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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
TDY — frequently asked questions
Is Teledyne Technologies Incorporated overvalued?
In our latest published analysis dated 2026-10-05, TDY looks meaningfully overvalued. The price recorded at analysis is USD 621 versus our fair value of USD 461; the high endpoint is presented separately as potential value of USD 536. That implies roughly 25.8% downside to fair value at that date.
Our latest published report, analyzed 2026-10-05, gives TDY a fair value of USD 461 and a potential value of USD 536. The conclusion is triangulated across multiple valuation models and weighted by reliability for Teledyne Technologies Incorporated's archetype; it is a dated research output, not a live price.
Should I buy TDY now?
Our latest published rating for TDY, analyzed 2026-10-05, is Sell. Teledyne Technologies Incorporated looks meaningfully overvalued at the analysis-date price of USD 621 versus fair value of USD 461; potential value is USD 536. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for TDY?
The dedicated bear-case section in our report analyzed 2026-10-05 documents Teledyne Technologies Incorporated's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is TDY's rating?
Our latest published rating for TDY, analyzed 2026-10-05, is Sell, with a published moat assessment of 7.5/10 (Narrow). It reflects our fair value of USD 461, the potential value of USD 536, and the price recorded at analysis (USD 621).
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§1 SamenvattingEN
Antwoord in 30 secondenSell
Koers versus waarde
Koers
$621.02
Reële waarde
$460.57
Potentiële waarde
$535.73
Per
2026-10-05
Waarom het kan werken
Accelerating NATO defense rearmament, surging counter-UAS procurement, and expanding sovereign European defense budgets propel organic revenue growth in Digital Imaging and Aerospace/Defense above 9.0%.
Wat onze visie zou veranderen
Digital Imaging operating margin drops below 15.0% on a trailing-twelve-month basis, triggered by expiration of temporary tariff relief and persistent softness in commercial industrial inspection spend.
We assign a Sell rating to Teledyne Technologies Incorporated (TDY), establishing a synthesized fundamental fair value of $460.57 per share against the current market quote of $621.02. Although Teledyne demonstrates exceptional cash flow conversion ($1,074.0 million free cash flow in FY2025) and high-barrier positions across defense optics, the current share price reflects a 34.84% premium to intrinsic equity value, creating a negative implied return of -25.84% and an asymmetric downside skew.3,6
Teledyne Technologies commands durable competitive advantages rooted in proprietary sensor design, custom focal plane arrays, and entrenched OEM qualification across military avionics, counter-UAS platforms, and specialized industrial testing. Digital Imaging generated $3,163.9 million in FY2025 with operating profit of $528.2 million, while European defense optics expanded organically by 20% in Q2 2026 via Qioptiq. Furthermore, of $117.3 million represented only 1.92% of FY2025 , allowing the business to convert $894.8 million in into $1,074.0 million in .
Despite these operational attributes, fundamental valuation analysis indicates that current equity prices have detached from cash flow realities. At $621.02, TDY trades at 23.64x forward earnings, an elevated level compared to peer industrial technology compounders such as Roper Technologies at 14.53x and ON Semiconductor at 18.74x. This valuation embeds an implied 10-year EPS growth expectation of 11.61%, well above our evidence-supported projection of 8.33%. Our synthesized intrinsic equity value of $460.57 incorporates primary owner earnings power ($493.48) and forward earnings compounding ($474.76) discounted at an 8.7813% WACC and 9.0455% cost of equity.2,3,4
Operational vulnerabilities further heighten the downside risk. In Q2 2026, Digital Imaging margin expansion of 350 basis points year-over-year relied on a non-recurring $10.0 million tariff pickup (100 to 120 basis points), while commercial industrial inspection and healthcare X-ray detectors expanded at only low single digits. Concurrently, executive management noted persistent delivery bottlenecks across component payloads affecting over $1.0 billion in annual revenue run-rate. With the equity priced for uninterrupted execution, any supply disruption or normalization in defense procurement will likely trigger multiple contraction toward historical averages.5
Secular Growth in Counter-UAS and Defense Sensing Payloads
Expanding defense budgets and surging procurement of counter-UAS sensor payloads, surveillance radars, and FLIR thermal camera modules support management guidance of ~7.5% growth in Digital Imaging and over 9% in FLIR.5
Low capital requirements of 1.92% of revenue ($117.3 million CapEx in FY2025) drive exceptional cash conversion ($1,074.0 million FCF), enabling regular programmatic acquisitions of $1.0 billion or more without balance sheet stress.5,6,7
Sovereign European Defense Footprint via Qioptiq
European operations contributed $1,525.8 million in FY2025 (25.0% of revenue), with UK-based Qioptiq delivering 20% organic growth in Q2 2026 under accelerating sovereign NATO defense procurement.5,8
Huisaanbeveling
Sell. Teledyne Technologies Incorporated is a high-quality compounder with commanding market share in specialized sensing, but its prevailing price of $621.02 reflects an unsustainable 34.84% premium to our fundamental fair value of $460.57. With forward earnings multiples elevated and over $1.0 billion in sales run-rate facing delivery constraints, capital is mispriced and should be reallocated.3,5
Bedrijfsoverzicht
Teledyne Technologies Incorporated is a global provider of specialized instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems designed for mission-critical sensing, monitoring, and communication environments.
The company operates through four principal business segments: Digital Imaging, which generated $3,163.9 million in FY2025 revenue (51.7% of total sales); Instrumentation, which delivered $1,457.1 million (23.8% of sales); Aerospace and Defense Electronics, contributing $1,058.7 million (17.3% of sales); and Engineered Systems, generating $435.7 million (7.1% of sales).
Geographically, Teledyne maintains balanced worldwide commercial and defense exposure: the United States accounts for $3,182.8 million (52.0% of FY2025 revenue), Europe accounts for $1,525.8 million (25.0% of sales), Asia represents $894.4 million (14.6% of sales), and other international regions contribute $512.4 million (8.4% of sales).
§2 BerenscenarioEN
In a severe compounding downturn, short-cycle commercial inspection and healthcare detector demand contract simultaneously while supply chain friction halts deliveries across $1.0 billion in critical sensor run-rate. Operating margins in Digital Imaging drop from 16.7% below 15.0%, exacerbated by the expiration of $10.0 million in quarterly tariff relief. Consolidated revenue growth stalls at 2.0% YoY, well below the guided >$6.53 billion target. Under this stress scenario, annual free cash flow declines toward $750 million, and multiple de-rating toward peer forward P/E levels of 17.0x-18.0x compresses equity value to $347.83 to $365.67, representing downside in excess of 40% from the October 5, 2026 share price of $621.02.
Revenue growth decelerates to 3.0%-3.5% as commercial inspection and healthcare X-ray detectors stagnate5
Supply chain component delivery friction impacts delivery schedules across $1.0B in revenue run-rate5
Digital Imaging operating margin compresses below 15.0% post-tariff expiration5
Terminal forward multiple compresses toward peer levels of 17.0x-18.0x4
A cyclical slowdown across commercial machine vision and test instrumentation coincides with payload delivery bottlenecks on long-lead defense contracts. Expiration of tariff relief and negative product mix dilute segment profitability, slowing free cash flow compounding and triggering multiple compression toward broader industrial peer averages.
Hoe deze these kan breken
Commercial Industrial Inspection Slump and Digital Imaging Tariff Reversal
Digital Imaging generates 51.7% of Teledyne's revenue ($3,163.9 million in FY2025). In Q2 2026, the segment benefited from a $10.0 million non-recurring net tariff pickup while short-cycle commercial inspection and healthcare X-ray detectors expanded at only low single digits. If commercial factory automation spend contracts and tariff relief expires, segment operating margins would fall below the 15.0% danger threshold from 16.7% reported in FY2025, pulling down consolidated operating profitability and driving an estimated -18.5% fair value impairment.5,8
FV impact
-1.8%
Vroege waarschuwingssignalen om te volgen
De vijf ontwikkelingen die onze beleggingsthese zouden verzwakken.
Expiration of the $10.0 million net tariff pickup combined with persistent low-single-digit commercial inspection growth compresses Digital Imaging operating margins below 15.0%, directly eroding consolidated operating profitability.
Huidig:16.70% (FY2025) / Q2 2026 benefited from 120 bps net tariff pickup
Waarschuwing als<15.00%
02
§3 ConcurrentievoordeelEN
Narrow
Teledyne's narrow economic moat is anchored by entrenched customer switching costs and proprietary intangible assets across mission-critical sensing and test instrumentation. The company's largest division, Digital Imaging, generated $3,163.9 million in FY2025 (51.7% of total revenues), supplying specialized infrared cameras, focal plane arrays, and machine vision systems. These products are deeply integrated into prime contractor defense architectures, aerospace airframes, and factory automation lines. Replacing a Teledyne sensor requires extensive engineering re-design, software re-configuration, and costly regulatory or military re-qualification, creating formidable inertia that insulates the installed base from direct replacement.
In specialized instrumentation ($1,457.1 million FY2025 revenue) and aerospace/defense electronics ($1,058.7 million revenue), Teledyne commands niche leadership in high-bandwidth oscilloscopes, protocol analyzers, and flight data acquisition units. Operating income in Instrumentation reached $400.4 million in FY2025, achieving a 27.5% operating margin, while Aerospace and Defense operating income was $262.1 million (24.8% margin). These units face limited direct socket competition from peers such as Keysight Technologies or Roper Technologies, preserving pricing power and stable operating returns.
The moat rating is constrained to Narrow (score of 7.5) because multi-decade programmatic acquisitions have accumulated $8.69 billion of balance-sheet goodwill, depressing GAAP ROIC to 7.47% relative to the 8.7813% cost of capital. While cash conversion is outstanding—operating cash flow was $1,191.3 million and free cash flow was $1,074.0 million in FY2025—the substantial capital base limits economic profit spreads. Furthermore, short-cycle exposure in commercial inspection and healthcare X-ray detectors and component delivery bottlenecks across $1.0 billion in revenue run-rate preclude a Wide moat designation.
Economische winst
Teledyne generated an accounting ROIC of 7.47% in FY2025, which sits slightly below its computed WACC of 8.7813% and moderate cost of equity of 9.0455%. This accounting optical drag is driven primarily by $8.69 billion of accumulated balance-sheet goodwill from programmatic acquisitions such as FLIR. In contrast, cash flow return on invested tangible capital is exceptionally strong, demonstrated by FY2025 free cash flow of $1,074.0 million on GAAP net income of $894.8 million (120% cash conversion).2,6
7.5/ 10
Narrow
Sources of advantage
01High Customer Switching Costs in Mission-Critical Systems — Teledyne's proprietary sensor designs, custom focal plane arrays, and deep OEM qualification in defense avionics, subsea interconnects, and oscilloscopes create severe customer switching friction. Specifying alternative sensors requires multi-year re-certification by military and industrial regulators.Wide
02Proprietary Intangible Assets and Specialized Sensor Intellectual Property — Uncooled and cooled infrared sensing architectures, protocol analyzers, and specialized defense optics through FLIR and Qioptiq provide specialized technological capabilities with high barriers to entry. These specialized sensor patents and manufacturing trade secrets protect high gross margin realizations.Moderate
Bekende bedreigingen voor het concurrentievoordeel
Bedreiging
Ernst
Tijdlijn
Beperking
Short-cycle commercial inspection and industrial factory automation cyclical downturn
medium
12-18 months
Diversified long-cycle defense surveillance, healthcare radiography, and sovereign defense contracts offset commercial volatility.5
The highlighted cell is Fair value when every assumption sits at its base level ($460.57). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $934.9M after modeled reinvestment of $127.5M, with terminal value at 76.5% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Teledyne delivers consistent execution in line with management guidance and mature compounder characteristics. Digital Imaging expands at ~7.5% and Aerospace/Defense grows at 7.2%, while Instrumentation delivers 5.7% growth. Free cash flow conversion remains healthy around 100% of net income, but present intrinsic value of $460.57 sits well below market trading levels.5
Digital Imaging and Aerospace/Defense organic revenue growth exceeds 9.0%5
§7 Beslissingsboom voor winstenEN
Overtroffen
Upgrade the rating; Re-examine order book duration and backlog book-to-bill in Digital Imaging while evaluating whether multiple compression begins to close the valuation premium.
A quarterly beat driven by defense sensor deliveries would confirm strong end-market execution and justify lifting the house stance to Reduce, though current prices ($621.02) still trade at a substantial premium to intrinsic fair value ($460.57).
Conform
Maintain Sell; Monitor component delivery lead times across the payload run-rate and verify operating cash conversion consistency.
Trigger: Q3 2026 GAAP EPS of $5.10 to $5.25 and non-GAAP EPS of $6.05 to $6.155
Meeting guidance affirms the baseline forecast of $6,536.4 million in FY2026 revenue and 19.35% operating margin. However, it leaves the stock trading at 23.64x forward earnings, far above peer levels and intrinsic fair value ($460.57). The house maintains the rating.
Gemist
Maintain Sell; Accelerate liquidation of remaining positions, test whether Digital Imaging margins breached the danger threshold, and assess broader industrial de-rating risks.
A miss would signal that component payload delivery friction or commercial inspection slowdown is depressing segment operating margins below expectations. Given the severe valuation stretch, an earnings shortfall would likely trigger immediate multiple de-rating. The house maintains the rating.
Winstkwaliteit
Teledyne exhibits high cash earnings quality, reflected in FY2025 operating cash flow of $1,191.3 million and free cash flow of $1,074.0 million, translating to an exceptional 120% cash conversion of GAAP net income ($894.8 million). Stock-based compensation is modest ($13.9 million in Q2 2026), representing less than 1.0% of revenues. However, earnings quality in recent periods includes temporary components: Q2 2026 Digital Imaging margins were aided by a $10.0 million net tariff pickup (contributing 100-120 bps), and product mix shifts toward lower-margin marine and subsea systems create subtle margin dilution.5,6,7
Ontwikkeling van schattingen
Post-earnings consensus estimates have held completely flat between September 28, 2026, and October 5, 2026. FY2026 diluted EPS consensus sits unchanged at $24.73, FY2027 diluted EPS remains at $26.77, and consensus revenues for FY2026 and FY2027 remain steady at $6,557.4 million and $6,924.2 million, respectively. This stability reflects management's upward guidance revision in Q2 2026 (raising full-year sales by $120 million to over $6.53 billion and non-GAAP EPS by $0.55), which analysts have now fully absorbed into static forecast models.1,5
Te volgen metrieken vóór publicatie
01
Metriek:
Digital Imaging Organic Revenue Growth and Segment Margin
HuidigGuided at ~7.5% for FY2026 with FLIR >9%; Q2 margin expanded 350 bps YoY.
Waarom het ertoe doet
Digital Imaging drives 51.7% of revenue ($3,163.9M in FY2025); any deceleration directly impacts consolidated cash generation.8
Cash flow generation represents Teledyne's primary operational strength. In FY2025, operating cash flow reached $1,191.3 million and capital expenditures were $117.3 million, producing free cash flow of $1,074.0 million. Free cash flow conversion stood at an exceptional 120.0% of GAAP net income ($894.8 million), driven by working capital efficiency and non-cash depreciation of $336.3 million. This performance continued into Q2 2026, with operating cash flow of $315.2 million and free cash flow of $284.7 million. Sustained free cash flow conversion well over 100% of net income provides dependable self-funding liquidity for ongoing debt reduction and strategic M&A.5,6,7
Accounting ROIC sits slightly below the cost of capital due to large unamortized goodwill from past transactions, but cash return on tangible capital is robust. As operating income expands toward $1,597.4 million by FY2030 on modest capital reinvestment (12-15% of NOPAT), economic profit creation will steadily improve.
FY2025 accounting ROIC of 7.47% trails the computed WACC of 8.7813% and moderate Ke of 9.0455% by approximately 131 basis points. This spread is an artifact of $8.69 billion in accumulated goodwill; excluding intangible assets, tangible invested capital yields returns well above 20%.
Meest recente omzetUS$ 6,1 mld.Omzet-CAGR +12,3%
Operationele marge18,8%10 boekjaarperioden
Meest recente vrije kasstroomUS$ 1,1 mld.FY2025
NettoschuldUS$ 2,1 mld.FY2025
Uitsplitsing van de resultatenrekeningHoe bedrijfsschaal wordt omgezet in gerapporteerde winst.
StockMarketAgent.AI
OmzetUS$ 6,1 mld.Kostprijs van de omzet−US$ 3,7 mld.BrutowinstUS$ 2,4 mld.Bedrijfskosten−US$ 1,2 mld.BedrijfsresultaatUS$ 1,1 mld.Niet-operationele posten en belastingen−US$ 255 mln.NettowinstUS$ 894,8 mln.
Financiële historische gegevens
Omzet
US$ 6.115.400.000
Kostprijs van de omzet
US$ 3.717.200.000
Brutowinst
US$ 2.398.200.000
Bedrijfskosten
US$ 1.248.400.000
Bedrijfsresultaat
US$ 1.149.800.000
Niet-operationele posten en belastingen
US$ -255.000.000
Nettowinst
US$ 894.800.000
Momentopname van de balansHoe de gerapporteerde activa in de geselecteerde periode worden aangehouden en gefinancierd.
Teledyne Technologies Incorporated (TDY) trades at 23.6x forward earnings against a peer median of 22.1x. Its EV/EBITDA of 19.0x compares with a peer median of 19.3x. The comparison uses 4 peers: Keysight Technologies Inc., Garmin Ltd., ON Semiconductor Corporation and Roper Technologies Inc., as of 2026-10-04 to 2026-10-05.
§10 Sector & cyclusEN
Cyclusfase
Expansion
Industry capital expenditure benchmarks reflect an industry capex-to-revenue ratio of 5.7% and capex-to-depreciation ratio of 1.41. In contrast, Teledyne's FY2025 capex of $117.3 million represented only 1.92% of revenue ($6,115.4 million), with capex-to-depreciation at 0.35x ($336.3 million depreciation). Management is expanding FY2026 CapEx by approximately 30% to alleviate manufacturing payload constraints.5,7
Bullencyclus
Accelerating NATO defense modernization, rising sovereign European security budgets, and urgent demand for counter-UAS payloads, infrared camera modules, and radar sensors propel long-cycle defense demand. In a full bull cycle, FLIR revenue expands at double-digit rates, European defense optics compound at 20%, and factory volume leverage expands consolidated operating margins toward 20.5%, generating over $1.2 billion in annual free cash flow.
Berencyclus
A downturn in commercial industrial inspection and semiconductor test spend, accompanied by prolonged healthcare X-ray detector stagnation, would compress volume leverage in Digital Imaging foundries. When combined with component delivery bottlenecks across $1.0 billion in critical run-rate, consolidated revenue growth could fall below 2.0% YoY, capping operating margins at 18.9% and exposing the equity to severe multiple compression.
Seculaire trends
Trend
Impact
Notitie
Global Defense Rearmament and Autonomous Warfare Sensing
positive
Rising sovereign defense spending across NATO, counter-UAS sensor integration, and infrared surveillance drive sustained demand for FLIR and Qioptiq optics.
Industrial Automation and Machine Vision Inspection
neutral
While long-term factory automation remains a structural driver, near-term short-cycle commercial inspection and healthcare X-ray detectors face low-single-digit demand growth.
Positionering
Teledyne is positioned as a diversified mature compounder across specialized sensing, instrumentation, and defense electronics. In FY2025, Digital Imaging contributed $3,163.9 million (51.7% of sales), Instrumentation delivered $1,457.1 million (23.8% of sales), Aerospace and Defense Electronics generated $1,058.7 million (17.3% of sales), and Engineered Systems accounted for $435.7 million (7.1% of sales). Geographically, the United States represents $3,182.8 million (52.0%), Europe accounts for $1,525.8 million (25.0%), and Asia provides $894.4 million (14.6%). This multi-segment structure buffers commercial cyclicality through long-cycle defense and aerospace programs.8
§11 PositiebeheerEN
Positiegrootte
0%
At $621.02, Teledyne trades at a 34.8% premium to its intrinsic fair value midpoint of $460.57, representing an implied return of -25.84%. Trading at 23.64x forward earnings compared to peer compounders ON Semi at 18.74x and Roper at 14.53x, the risk-reward profile offers no margin of safety. Consequently, the house assigns a Sell rating and recommends complete divestment or zero portfolio allocation.3,4
Risico
Under a Sell recommendation, risk management centers on eliminating downside exposure to extreme valuation multiple contraction. Teledyne trades at a forward P/E of 23.64x, an elevated level relative to peers ON Semiconductor (18.74x) and Roper (14.53x). Investors holding legacy shares should systematically harvest gains and reallocate capital toward assets offering an adequate margin of safety relative to intrinsic cash flow generation ($1,074.0M FY2025 FCF). Monitor quarterly book-to-bill ratios and payload delivery updates on the $1.0B constrained revenue run-rate.
Entree-tranches
Niveau
Actie
Waarom
$460.57 (House Fair Value Midpoint)
Re-underwrite baseline economics and monitor valuation discount
At the fair value midpoint of $460.57, the 34.8% market premium would be eliminated. Re-evaluate operating margin sustainability and payload delivery metrics before considering capital deployment.
Evaluate risk-reward for potential initiating entry
Exit-tranches
Niveau
Actie
$621.02 (October 5, 2026 Share Price)
Execute immediate exit or systematic liquidation of remaining long positions
$650.00 - $675.00 (Momentum Rebound Resistance)
Fully exit any residual holdings into liquidity on near-term upward momentum
At $621.02, the stock trades at an implied -25.84% return relative to our fundamental fair value of $460.57. Value investors should avoid entering positions due to an entirely absent margin of safety against our 8.7813% WACC hurdle.2,3
Growth at a Reasonable Price (GARP) Investors
Avoid
With five-year revenue CAGR projected at 5.46% and EPS growth tapering toward 6.50% in FY2030, a 23.64x forward multiple yields an elevated PEG ratio of 1.97 against peer median PEG of 1.39, rendering risk-reward unattractive for growth-oriented strategies.3
Income and Total Return Investors
Avoid
Teledyne pays no dividend, dedicating all free cash flow ($1,074.0 million in FY2025) to programmatic acquisitions and repurchases. With zero current income yield and negative capital return expectations, total return mandates should avoid the name.5,6
§14 EindaanbevelingEN
Actie
Verkopen
We issue a Sell recommendation on Teledyne Technologies Incorporated (TDY). At $621.02 per share, TDY trades at a 34.84% premium to our synthesized intrinsic fair value of $460.57, representing an expected return of -25.84%. While the company's operating franchise and cash conversion remain robust, prevailing prices price in flawless execution and expose investors to substantial multiple de-rating.3
Teledyne's current forward earnings multiple of 23.64x significantly exceeds peer compounders like Roper Technologies at 14.53x and ON Semiconductor at 18.74x. With component supply friction impacting over $1.0 billion of annual revenue run-rate, capital should be reallocated to preserve principal and capture superior risk-adjusted return profiles.
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Sources
The records this analysis drew on, as they stood when it was run.
Analyst consensusData as of 2026-10-05 · Published 2026-10-05 · Provider-adjusted · cited for 2 figuresCited in Beslissingsboom voor winsten
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Severe Supply Chain Payload Disruption on Long-Lead Defense Deliveries
Management highlighted that over $1.0 billion of annual revenue run-rate depends on constrained component payloads and supplier availability. If component delivery friction worsens, organic growth across Digital Imaging and Aerospace/Defense ($1,058.7 million in FY2025 revenue) would stall below 2.0% YoY, failing to reach the guided $6.53 billion target and resulting in an estimated -23.4% fair value impact.5,8
FV impact
-3.9%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 18 months
Macro Multiple De-rating and Cyclical Peak Valuation Compression
Teledyne trades at a forward P/E of 23.64x, while peers ON Semiconductor and Roper trade at 18.74x and 14.53x. In an environment of elevated capital costs with a normalized cycle Ke of 9.262%, terminal multiple compression toward 17.0x-18.0x would reduce equity fair value by 20.0%.2,3,4
Delivery bottlenecks on over $1.0 billion of revenue run-rate reliant on constrained payload components cause consolidated revenue growth to miss the guided >$6.53 billion baseline and fall below 2.0% YoY.
Huidig:6.88% (FY2026 forecast) / guided just under 7%
Multiple de-rating towards peer levels (ON Semi at 18.74x, Roper at 14.53x) triggered by elevated cost of capital (9.262% normalized Ke) and industrial cycle fatigue.
Deceleration or contraction in European defense optics shipments following potential budgetary delays or trade restrictions on international sales ($1,525.8 million in FY2025), breaching the zero-growth falsification boundary.
Dilution from lower-margin marine and autonomous underwater vehicles or inflation in component inputs driving consolidated operating margin below 16.50%, breaching the competitive moat pricing-power falsifier.
Specialized component payload shortages and supply chain delivery delays
low
6-12 months
Management is expanding FY2026 CapEx by approximately 30% off the $117.3 million FY2025 baseline to expand internal production capacity and build buffer inventory.5,7
International trade frictions and reversal of tariff ruling benefits
medium
12-24 months
Localized European production presence through Qioptiq in the UK and European facilities allows Teledyne to serve NATO procurement directly without US-only export frictions.5,8
Discounted forecast-period cash flows (US$ 85,25) plus discounted terminal value (US$ 277) minus signed per current share (US$ 45,82) equals the US$ 317 lens value shown above. Negative net debt is , so subtracting it raises value.
Europe generates 25.0% of consolidated sales ($1,525.8M in FY2025); sovereign European defense spending provides key geographic growth diversification.8
04
Metriek:
Durability of Digital Imaging Margin Expansion Post-Tariff Benefit
HuidigCore operational margin expansion exceeded 200 bps year-over-year in Q2 2026 excluding tariffs; full-year margin guided up 56 bps.
Waarom het ertoe doet
Digital Imaging margins benefited from a $10.0M net tariff pickup in Q2 2026 (100-120 bps) that will not recur indefinitely.5
05
Metriek:
Programmatic M&A Pipeline and Capital Deployment
HuidigActive evaluation underway while exercising price discipline against inflated private asset valuations; cash balance of $352.4M and total debt of $2,027.0M.
Waarom het ertoe doet
M&A compounding is core to the mature compounder archetype; management has deployed over $1.0B in recent years and evaluates targets up to $1.0B+.5
Teledyne executes a disciplined capital allocation strategy focused on programmatic M&A, modest internal reinvestment, and balance-sheet deleveraging. In the past two years, the company deployed over $1.0 billion in acquisitions and currently evaluates targets up to $1.0 billion or larger while maintaining rigorous valuation discipline. Total debt stands at $2,027.0 million with cash of $352.4 million, yielding a modest debt weight of 6.58%. The company does not pay dividends, directing all free cash flow toward debt reduction, strategic acquisitions, and high-return sensor production investments (guided 30% FY2026 CapEx increase).
Operating cash flow of $1,191.3 million and free cash flow of $1,074.0 million significantly outpaced FY2025 GAAP net income of $894.8 million, sustained in Q2 2026 with $284.7 million FCF.
Generates over $1.0 billion in annual discretionary liquidity, enabling rapid debt paydown and self-funded programmatic M&A without equity dilution.
Consolidated operating margin was 18.80% in FY2025 ($1,149.8M EBIT on $6,115.4M revenue), with management guiding to 56 bps of expansion in 2026 reaching 19.35% in FY2026 and 20.03% by FY2030.
Demonstrates resilient pricing power across specialized sensing niches, mitigating cost inflation and lower-margin commercial product mix.
Asset-Light Operations Contrast with Industry Reinvestment Intensity
Teledyne reinvested only 1.92% of sales in CapEx ($117.3 million) in FY2025, compared to the broader industry average CapEx-to-revenue ratio of 5.7%.
High capital efficiency insulates free cash flow from fixed asset drag, though guided 30% CapEx growth in FY2026 is necessary to alleviate payload capacity constraints.
ON Semiconductor CorporationON
Koers / reële waarde
Reële waardeUS$ 46,4Report-date priceUS$ 76,94
Beoordelingsdatum
ConcurrentievoordeelNarrow
Beleggingsscorekaart60 / 100
Roper Technologies, Inc.ROP
Koers / reële waarde
Reële waardeUS$ 410,13Report-date priceUS$ 354,32
Beoordelingsdatum
ConcurrentievoordeelNarrow
Beleggingsscorekaart66 / 100
Marge
TDY
Teledyne Technologies Incorporated
$28.8B
23.6x
4.5x
19.0x
9.2%
—
KEYS
Keysight Technologies Inc.
$65.4B
27.7x
9.9x
38.7x
20.9%
25.7%
GRMN
Garmin Ltd.
$54.2B
25.5x
7.1x
22.4x
21.9%
30.4%
ON
ON Semiconductor Corporation
$33.0B
18.7x
5.3x
16.2x
8.3%
19.5%
ROP
Roper Technologies Inc.
$35.0B
14.5x
4.2x
14.2x
13.1%
27.7%
Aerospace Electronics Modernization and Avionics Upgrade Cycles
positive
Commercial aviation fleet renewals and defense avionics upgrades support 7.2% guided revenue growth in Aerospace and Defense Electronics and test instrumentation demand.
