Digital imaging and instrumentation provider Teledyne (NYSE: TDY) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 6.7% year on year to $1.54 billion. Its non-GAAP profit of $5.57 per share was 1.8% above analysts’ consensus estimates.
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Teledyne (TDY) Q3 CY2025 Highlights:
- Revenue: $1.54 billion vs analyst estimates of $1.53 billion (6.7% year-on-year growth, 0.8% beat)
- Adjusted EPS: $5.57 vs analyst estimates of $5.47 (1.8% beat)
- Adjusted EBITDA: $377.8 million vs analyst estimates of $375.3 million (24.5% margin, 0.7% beat)
- Management slightly raised its full-year Adjusted EPS guidance to $21.53 at the midpoint
- Operating Margin: 18.4%, in line with the same quarter last year
- Free Cash Flow Margin: 20.4%, up from 15.8% in the same quarter last year
- Market Capitalization: $26.9 billion
“This morning, we were pleased to announce record quarterly sales, non-GAAP earnings per share and free cash flow,” said Robert Mehrabian, Executive Chairman.
Company Overview
Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE: TDY) offers digital imaging and instrumentation products for various industries.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Teledyne grew its sales at an exceptional 14.1% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Teledyne’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 3.3% over the last two years was well below its five-year trend. We also note many other Inspection Instruments businesses have faced declining sales because of cyclical headwinds. While Teledyne grew slower than we’d like, it did do better than its peers. 
This quarter, Teledyne reported year-on-year revenue growth of 6.7%, and its $1.54 billion of revenue exceeded Wall Street’s estimates by 0.8%.
Looking ahead, sell-side analysts expect revenue to grow 5.1% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Teledyne has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Looking at the trend in its profitability, Teledyne’s operating margin rose by 3.5 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Teledyne generated an operating margin profit margin of 18.4%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Teledyne’s spectacular 15.3% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Teledyne, its two-year annual EPS growth of 5.2% was lower than its five-year trend. We hope its growth can accelerate in the future.
In Q3, Teledyne reported adjusted EPS of $5.57, up from $5.10 in the same quarter last year. This print beat analysts’ estimates by 1.8%. Over the next 12 months, Wall Street expects Teledyne’s full-year EPS of $21.24 to grow 8.7%.
Key Takeaways from Teledyne’s Q3 Results
It was good to see Teledyne narrowly top analysts’ revenue expectations this quarter. On the other hand, its EPS guidance for next quarter slightly missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $572.15 immediately following the results.
Is Teledyne an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
