Teledyne Technologies Incorporated (TDY)

Conclusion

Teledyne Technologies Incorporated supplies enabling technologies for industrial growth markets, through segments covering digital imaging, instrumentation, and aerospace and defense electronics. At 643.34 USD on 2026-11-09, its market capitalisation is 29.8 billion USD and its enterprise value is 31.3 billion USD.

The verdict is fair. The P/E of 29.0 sits close to its ten-year median of 29.2, and EV/EBITDA of 19.0 is close to its median of 18.8. The DCF gives 557.36 USD per share at a discount rate of 9.28%. The fair value band runs from 480.16 to 720.24 USD with a midpoint of 600.20 USD, giving a margin of safety of -6.7% at the current price. The fair value from historical multiples is 643.04 USD. The reverse DCF implies revenue growth of 10.2% a year, against a five-year revenue CAGR of 14.7% and a five-year FCF per share CAGR of 9.4%.

What holds the case up is the balance sheet: an Altman Z-score of 5.60, net debt to EBITDA of 0.89, and interest coverage of 26.9. Free cash flow conversion of 111.8% on a trailing basis and eight earnings beats in eight quarters support earnings quality. The weakest numbers are ROIC of 8.5% against a WACC of 8.9%, a five-year share count CAGR of 4.6%, and a price-to-sales ratio of 4.57 against a ten-year median of 3.93.

Financial health

Financial strength is green, held up by four metrics assessed as good. The current ratio is 2.31 and the quick ratio is 1.28, both at September 30, 2026. Net debt to EBITDA is 0.89 on a trailing basis, debt to equity is 0.18, and interest coverage is 26.9. The Altman Z-score is 5.60, in the safe zone. The Altman model was designed for manufacturers, and Teledyne is an industrial technology company, so it fits reasonably well here. Insolvency risk is low, about 0.1% by the estimate of the Ohlson model over one to two years, based on December 31, 2025 figures. Debt has grown by 13.0% a year over five years, measured against revenue growth, so borrowing has not outpaced the business.

Earnings quality

Earnings quality is yellow, with two metrics good and one bad. Free cash flow conversion is 111.8% trailing and 104.9% over five years, and the accrual ratio is -2.0%, both signs of cash-backed earnings. Stock-based compensation is 0.6% of revenue, and free cash flow after it is 1.11 billion USD. The Piotroski score is 7 of 9. The share count has grown at a CAGR of 4.6% over five years, so dilution is a drag rather than buybacks. The Beneish M-score is not available. The company beat estimates in all eight of the last quarters, with an average surprise of 5.4%. Analysts raised current-year estimates over the last 30 days, 11 upward and none downward, and the next-year EPS estimate growth is 8.6%.

Profitability

Profitability is green. The operating margin is 20.0% against a ten-year median of 15.6%, and the net margin is 15.8% against a median of 12.9%. The gross margin is 38.6% against a median of 39.3%. Operating margin stability is 16.1%. ROIC is 8.5% against a WACC of 8.9%, and the reported ROIC minus WACC value is -0.5%, rated neutral. The five-year median ROIC is 7.1%, so returns have been improving but still barely cover the cost of capital. ROE of 9.2% is not inflated by leverage: the DuPont split shows a net margin of 14.6%, an asset turnover of 0.40, and an equity multiplier of 1.45, all as of December 31, 2025.

Growth

Growth is green, with four metrics assessed as good. Revenue CAGR is 3.9% over three years, 14.7% over five years, and 10.3% over ten years. EPS CAGR is 4.5% over three years, 12.2% over five years, and 13.3% over ten years. FCF per share CAGR is 40.0% over three years, 9.4% over five years, and 17.5% over ten years. Revenue grew in eight of the ten comparable years. The recent three-year pace is slower than the five- and ten-year rates, and the next-year EPS estimate growth of 8.6% sits between them.

Valuation

Valuation is yellow, with one neutral signal: the verdict is fair. Against their ten-year medians, the P/E of 29.0 is a premium of -0.7%, EV/EBITDA of 19.0 is a premium of 1.1%, and P/FCF of 26.0 is a premium of 0.1%. Price-to-sales is a premium of 16.3%, and price-to-book is a discount of -11.2%. The DCF gives 557.36 USD per share, using a discount rate of 9.28% and a long-term growth rate of 2.5%. Terminal value accounts for 57.1% of that figure, so the DCF should be read with caution. The fair value band runs from 480.16 to 720.24 USD, with a midpoint of 600.20 USD and a margin of safety of -6.7%. These are estimates built on fixed assumptions, not price targets. The reverse DCF implies growth of 10.2%, against five-year revenue CAGR of 14.7% and five-year FCF per share CAGR of 9.4%. The company pays no dividend.

Risks

The largest risk is returns: ROIC of 8.5% is below WACC of 8.9%, so growth that does not lift returns would add little value. A share count rising at 4.6% a year dilutes per-share gains, and a weaker free cash flow conversion would challenge the earnings base. The price-to-sales premium of 16.3% over the ten-year median leaves less room if margins fall. The DCF depends on the terminal value for 57.1% of its result, so small changes in the long-term assumptions would move it. The Beneish M-score is not available, so manipulation risk is not tested. This analysis does not include a debt maturity schedule or revenue by segment, so refinancing timing and segment-level exposure cannot be judged.