TDY — Teledyne Technologies Incorporated

The sell side is unambiguously bullish: 12 Buys vs 4 Holds and 2 Sells per the FMP breakdown, a 'Buy' consensus rating, and post-Q2 target hikes (Morgan Stanley $680 to $715, Needham to $750, Stifel to $775), with the FMP consensus target at $695.83 (high $830, low $465). The tape disagrees. As of 2026-09-13 the stock was down 12.05% over one month and 5.50% over six months, with RSI at 35.53 and price 3.58% / 6.05% / 1.98% below the 20-, 50- and 200-day averages. That corrective phase lines up with the 2026-08-10 Varex Imaging acquisition announcement plus broad de-rating pressure on high-multiple industrials. Fundamentals up, stock down is why this reads Neutral rather than Bullish.

Revenue growth is re-accelerating, not fading: +6.65% y/y in Q3 2025, +7.32% in Q4 2025, +7.60% in Q1 2026 and +9.84% in Q2 2026 ($1.6625B vs $1.5137B). Trailing-twelve-month revenue climbed from $5.59B (through Q2 2024) to $5.95B (Q2 2025) to $6.37B (Q2 2026). Operating margin strengthened in five of the last six quarters: 20.05% in Q2 2026 vs 18.38% a year earlier (+167bps), matching Q4 2025's 20.44% as the best prints in the 12-quarter window, with the Q4 2024 trough of 15.78% well behind it. GAAP diluted EPS compounded from $3.72 (Q1 2024) to $5.37 (Q2 2026); TTM net income is $974.8M on $6.37B of revenue, a 15.3% net margin, and TTM free cash flow is $1.14B. One data flag worth naming: Q4 2025 gross profit of $474.6M (29.4% of revenue) is wildly out of line with the $592-738M (43-44%) prints in adjacent quarters while operating and net income held up - that looks like a one-time item sitting in cost of goods, not a structural gross-margin break. Net: a steady, mid-cycle, accelerating grower - not a cyclical trough story.

Fairly valued to modestly full as of 2026-09-13 - not cheap, not egregious. P/E TTM of 29.07x sits essentially on the 5-year average of 28.8x, while P/S of 4.39x is about 15% above the 5-year average of 3.82x. The forward math is friendlier: on FY2026 non-GAAP guidance of $24.45-$24.65 (FMP next-FY estimate $24.718), the forward P/E is ~24.4x, versus ~28.8x on GAAP FY26 guidance of $20.73-$20.99. PEG of 2.236 is rich for ~8-10% revenue and low-teens non-GAAP EPS growth, and EV/EBITDA of 18.9x is a premium to the broad market but broadly in line with quality industrial peers. Trailing FCF of $1.14B is a 4.1% FCF yield and 17.9% of revenue. The 'Neutral vs. its own history' label is the right call: a full but not irrational price for consistency, with no valuation cushion.

The key tell is that estimates went UP while the stock went DOWN. TDY beat Q2 2026 on 2026-07-22 (non-GAAP EPS $6.28 vs $5.79 consensus) and raised full-year guidance, yet the shares fell 12% over the following month - that is multiple compression, not estimate erosion. The read: the 24.4x forward non-GAAP multiple is not pricing in much of the ~8-10% top-line growth and low-teens non-GAAP EPS growth already guided, so if the late-October Q3 print confirms the trajectory, a re-rating toward 26-27x FY27 estimates is the upside case. The bear read is that the Varex deal signals a step toward lower-margin, slower-growth X-ray component assets and the multiple simply stays compressed. Also mind the GAAP/non-GAAP gap: roughly $3.6/share of FY26 guidance is add-backs (mostly acquired-intangible amortization), so the 'beats' are adjusted-EPS beats.

As of 2026-09-13: RSI(14) at 35.53 - weak, approaching but not at oversold, with no bullish divergence visible in the data. The $603.79 price sits 3.58% below the 20-day (~$626), 6.05% below the 50-day (~$643) and 1.98% below the 200-day (~$616) - a fully bearish short-term stack with the long-term average only marginally overhead. Momentum is negative across every window: -1.12% 1-week, -12.05% 1-month, -3.55% 3-month, -5.50% 6-month. Implication: this is still a falling knife short-term; there is no entry confirmation yet. A reclaim of the 50-day (~$643) with RSI back above 50 would confirm a bottom; a decisive break below the 200-day (~$616) opens the $540-560 zone. These are dated snapshot levels, not live figures.

• Defense and space budgets: geopolitical tension is a direct tailwind for thermal imagers, space-grade sensors and defense electronics; a continuing resolution or budget delay is the mirror-image risk to order timing.
• Short-cycle industrial softness: management has flagged mixed visibility in instrumentation and test & measurement - the segment most levered to global manufacturing PMI and industrial capex.
• Rate-driven multiple compression: the balance sheet is insulated (D/E 0.186, ~1.1x net leverage, $340M cash, beta 0.908) but the ~29x trailing P/E is not - long-duration quality compounders de-rate when rates rise, a plausible driver of the recent 12% drawdown.
• Healthcare/industrial X-ray consolidation and the antitrust review path for the announced Varex Imaging acquisition.
• Currency and global exposure: a large share of revenue is generated outside the US, so a strong dollar is a recurring translation headwind.

• Q3 2026 earnings in late October 2026 - the next hard read on organic growth, margin trajectory and any FY26 guidance revision.
• Varex Imaging acquisition (announced 2026-08-10): regulatory clearance, closing timeline, financing mix and first accretion/dilution disclosure.
• Continued defense/space order momentum - record order trends highlighted at the September 2026 Jefferies conference, plus the $15.4M Teledyne Energetics UK defense contract win.
• Further bolt-on M&A: $284.7M of Q2 2026 free cash flow and 1.1x net leverage leave ample capacity for additional deals.
• Sell-side target revisions (Needham $750, Stifel $775, Morgan Stanley $715) that could pull the tape back toward the FMP consensus of $695.83.

• Multiple risk: at ~29x trailing GAAP, ~24.4x forward non-GAAP and PEG 2.24 there is no valuation cushion, and the -12% month demonstrates how quickly the multiple can compress.
• Varex integration and dilution risk - absorbing a slower-growth X-ray components business into a company already carrying $10.9B of equity on $15.3B of assets, largely goodwill and intangibles.
• Returns on capital look thin on paper (ROIC 6.8%, ROE 8.5%), a mechanical consequence of acquisition goodwill - which means M&A discipline is effectively the whole investment case.
• Short-cycle industrial and test & measurement exposure with explicitly 'mixed visibility'; a manufacturing downturn would bite the faster-cycling segments first.
• Earnings-quality optics: a ~$3.6/share GAAP-to-non-GAAP gap in FY26 guidance means adjusted numbers flatter the underlying trend.
• The Q4 2025 gross-margin anomaly (29.4% vs ~44% in adjacent quarters) is unexplained in the data - if it recurs, the clean margin-expansion narrative weakens.

Teledyne is a genuinely high-quality, low-beta compounder - accelerating revenue (+9.8% y/y in Q2 2026), operating margin at a 12-quarter high (20.05%), $1.14B of trailing free cash flow, and 1.1x net leverage - and the 12% one-month drawdown has made the entry point meaningfully better than it was in August. But at ~24.4x forward non-GAAP EPS and ~29x trailing GAAP you are paying close to the company's own five-year average multiple for ~8-10% growth, and my own fair-value work lands near $650, only about 8% above the 2026-09-13 price of $603.79. Treat it as a quality hold-and-add-on-weakness name rather than a bargain, and wait for the tape to confirm (RSI back above 50 or a reclaim of the 50-day) before adding aggressively. This is analysis, not personalized financial advice.

Applied a 24x multiple - roughly the non-GAAP equivalent of TDY's own 5-year average P/E of 28.8x (GAAP), shaded slightly for Varex integration risk - to FY2027E non-GAAP EPS of about $27.25, built from the FY2026 guidance midpoint of $24.55 grown ~11% on 7-8% revenue growth, ~75bps of margin expansion and modest buybacks. Cross-check: 17.5x FY2027E EV/EBITDA of roughly $1.78B, less ~$1.7B of net debt, yields about $636/share, which brackets the $650 figure.