TDY — Teledyne Technologies Incorporated

The narrative is fundamentally positive: Q2 2026 adjusted EPS of $6.28 beat consensus by roughly $0.50, revenue rose 9.8% YoY, and management tightened FY2026 adjusted EPS guidance to $24.45–$24.65. Sell-side sentiment is constructive—consensus is Buy, average target is $695.83, high target $830—but price action has been cautious, with RSI at 37.85 and the stock below its 20- and 50-day moving averages. So sentiment is constructive on the business but not aggressively bullish on the tape.

Revenue has inflected upward: Q2 2026 revenue of $1.6625B was up 9.8% YoY, and operating income rose 19.8% YoY to $333.2M. Operating margin expanded from roughly 17.4% in Q1 2024 to about 20.0% in Q2 2026, and GAAP diluted EPS grew from $4.43 in Q2 2025 to $5.37 in Q2 2026. Last four quarters show a clear upward trajectory despite normal Q1 seasonality. GAAP lines have some one-off noise—Q4 2023 and Q4 2025 in particular—but the revenue and operating-income trend is genuinely accelerating, not just a single-quarter blip.

At $626.50, TDY trades at 30.2x TTM GAAP EPS, above its 5-year average P/E of 28.8, and 4.56x TTM sales versus a 5-year average of 3.82x. However, on forward earnings it is cheaper: about 25.4x consensus FY2026 EPS of $24.72, which is below the 5-year average P/E. With 20% operating margins, ~15% net margins, 10% revenue growth, and low debt, the stock is not cheap on trailing numbers but looks fairly valued to slightly attractive on forward earnings.

The stock has de-rated during a period of rising estimates. The price is about 10% below its 52-week high while FY2026 EPS guidance has been raised to $24.45–$24.65. At $626.50, the market is paying roughly 25x forward EPS, a discount to TDY's own 5-year average P/E, for an earnings trajectory that is still being revised upward. If Q3/Q4 confirm the guidance, the de-rating could reverse. If short-cycle commercial weakness spreads, estimates will come down, and 25x forward earnings would not be a value floor.

As of 2026-08-27, RSI(14) stood at 37.85, price was 5.49% below the 20-day SMA, 3.2% below the 50-day SMA, but still 2.57% above the 200-day SMA. That is a short-term pullback within a longer-term uptrend, not a broken chart. RSI is approaching oversold but not yet at a confirmed reversal level; the 200-day moving average sits near $610 as nearby support. Entry timing looks better after price stabilizes or reclaims the 20-day SMA rather than chasing the tape today.

• Geopolitical instability and defense modernization budgets are a tailwind for Teledyne FLIR and defense electronics.
• Short-cycle commercial/industrial automation and semiconductor test demand remain soft, limiting organic growth in those segments.
• Higher-for-longer interest rates and tech/growth rotation can compress the multiple paid for long-duration defense-tech growth.
• Germanium and rare-earth supply-chain constraints are a monitored cost and gross-margin risk.
• AI/HPC data-center buildout is creating new demand for LeCroy high-speed Ethernet validation and test products.

• Close and integrate the ~$1.1B Varex Imaging acquisition; accretion and cross-selling would support estimates.
• Q3 2026 earnings in late October: any organic commercial stabilization, continued defense order strength, or FY guidance raise.
• Revenue ramp on U.S. Army DUTCH uncooled thermal program and LeCroy Ultra Ethernet AI validation wins.

• Varex acquisition integration, regulatory approval, and slightly higher leverage if the deal closes on current terms.
• Persistent weakness in short-cycle commercial, industrial automation, and semiconductor test end markets.
• Germanium/rare-earth supply constraints could keep gross margins under pressure.
• Multiple compression risk: at ~30x TTM GAAP earnings, the stock is not priced for a downturn.
• GAAP earnings are lumpy due to acquisition-related and one-off items, so adjusted-EPS beats can overstate clean momentum.

TDY is a quality compounder with accelerating revenue, expanding operating margins, strong free cash flow, low debt, and defense/AI catalysts. At roughly 25x forward earnings, it is not expensive relative to its own history, and I lean bullish on a 12-month view—though the near-term technical picture suggests waiting for stabilization rather than chasing the current pullback.

Calculated by applying a 28.0x forward P/E to consensus FY2026 EPS of $24.718—a modest discount to TDY's 5-year average P/E of 28.8 to reflect the sub-7% ROIC and mixed short-cycle demand, but supported by 10% revenue growth, ~20% operating margins, negative accruals, and low leverage. This yields $692.10 as a reasonable intrinsic estimate as of 2026-08-27.