TERADATA CORP /DE/ (TDC): what the price requires
At today's price, TERADATA CORP /DE/ (TDC) is priced for +23.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TDC
Headline
| Field | Value |
|---|---|
| Ticker | TDC |
| Company | TERADATA CORP /DE/ |
| Sector / Industry | Technology / Software |
| Current price | $34.02/sh |
| Composition | Product Sales 88% / Consulting Services 12% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.9% |
| Operating margin today | 6.8% |
| Margin expansion implied | +1.1pp |
| Implied growth | 23.7% |
| Multiple paid | 26x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.9pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.64σ |
| cohort percentile (of 177 peers) | 45 |
| sustained it ~5 years at this level | 36% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.58x | 4 | justifies |
| Earnings | 0.52x | 5 | justifies |
| Relative | 0.48x | 5 | justifies |
| Growth | 0.53x | 3 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $106.21 | 0.32x | yes | FCF base $0.7B, growth -1% (input: historical growth), terminal g 0.5%, WACC 8.2%, 5yr projection |
| DCF Exit Multiple | Growth | $64.42 | 0.53x | yes | Exit EV/EBITDA: 20.9x / 22.9x / 24.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $71.13 | 0.48x | yes | P/E 24.12x (blended: static sector reference 35x + trailing (TTM) 8x), scenarios: 20.4x / 24.1x / 27.9x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $47.12 | 0.72x | yes | BV/sh $5.77, ROE (TTM) 75.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $215.98 | 0.16x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $25.20 | 1.35x | yes | Rev $1.7B, growth -1% (input: historical growth; tapered), Terminal P/S: 1.6x / 1.9x / 2.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $52.44 | 0.65x | yes | EPS $4.37, growth 2% (input: historical EPS growth), PEG=4.61 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $23.35 | 1.46x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.17B × (1−23%) / WACC 8.2% → EPV (no growth) |
| Residual Income | Asset | $78.49 | 0.43x | yes | BV $5.77 + 5yr PV of (ROE (TTM) 75.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $23.81 | 1.43x | yes | √(22.5 × EPS $4.37 × BVPS $5.77) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $36.86 | 0.92x | yes | EBITDA $0.13B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $78.72 | 0.43x | yes | FCF $670.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $65.40 | 0.52x | yes | SBC-adj FCF $0.55B (FCF $0.67B − SBC $0.12B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $141.01 | 0.24x | yes | EPS $4.37 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $139.88 | 0.24x | yes | Revenue $1.69B × sector P/S 8.0x |
| PEG Fair Value | Relative | $163.88 | 0.21x | yes | EPS $4.37 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $47.24 | 0.72x | yes | EPS $4.37 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $262.0m |
| Net debt / NOPAT (after-tax) | -2.97x (net cash) |
| Net debt / operating income (pre-tax) | -2.28x (net cash) |
| Interest coverage | 4.4x |
| Share count CAGR (buyback) | -2.9% |
| Burning cash | no |
Bullet Takeaways
- Teradata is a legacy analytics-database company mid-transition to the cloud: total annual recurring revenue reached $1.492 billion in Q1 2026 with public cloud ARR of $686 million growing 13%, while total revenue keeps shrinking.
- The headline Q1 GAAP EPS of $3.47 is a mirage from a $480 million SAP litigation settlement; non-GAAP EPS was $0.88, and full-year non-GAAP EPS guidance is $2.53 to $2.57.
- The biggest risk is the arithmetic of the transition: cloud ARR must grow faster than the legacy on-premises base declines, and FY2026 guidance still calls for total revenue down 2% to 4%.
Bull Case
The trajectory that matters is inside the revenue line, not on top of it. Teradata's total revenue is shrinking, but the composition is shifting toward the recurring, cloud-based part of the business that carries higher margins and stickier economics. Public cloud ARR reached $686 million in Q1 2026, growing 13%, against total ARR of $1.492 billion. The FY2025 10-K frames Total ARR as the company's headline strategic metric, the "annual contract value for all active and" recurring contracts, precisely because the transition story is about mix, not top-line growth. As cloud grows double digits and legacy on-premises runs off, the blended business is becoming more valuable per dollar even as the dollar count falls.
The cash generation is the part the shrinking revenue hides. Gross margin expanded through the year, from 56.4% to 62.2% across the last four quarters, and free cash flow has climbed every quarter, from $39 million to $391 million (the last figure lifted by the SAP settlement, but the underlying trend is real). Trailing free cash flow of $670 million against a $3.25 billion market cap is a 20% free-cash yield, and cash flow converts at 159% of net income. A business throwing off this much cash relative to its market value has enormous latitude, and the balance sheet is net cash, so none of that cash is claimed by lenders.
Management is aiming the platform at the demand wave. The 10-K describes Teradata helping customers "manage, secure, and provide trustworthy data for AI and analytics across hybrid and multi-cloud environments", which positions the legacy enterprise data estate as the foundation AI workloads need to run against. The company is not trying to out-grow Snowflake; it is trying to keep large, entrenched enterprise customers on a modernized hybrid platform while harvesting the cash. In November 2025 the board authorized a new $500 million repurchase program effective January 2026. The bull case is a high-cash-yield transition where cloud ARR growth and margin expansion gradually outrun the legacy decline.
Bear Case
Look at how the company is spending its cash against what its business is actually doing, and a tension appears. In November 2025 the board authorized a $500 million share repurchase program per the 10-K, and Teradata bought back $130 million of stock over the trailing year, roughly 31% of net income. Returning capital is defensible, but this is a company whose total revenue "decreased by 5% in 2025 as compared to 2024, with a 2% decrease in recurring revenue", and whose own FY2026 guidance calls for total revenue down another 2% to 4%. Buying back stock is the easiest way to support per-share metrics when the underlying business is contracting, and it deserves scrutiny: is the capital going to buybacks because the cloud opportunity does not warrant more reinvestment, or because reinvestment has not been paying off?
The reported earnings compound the need for skepticism. Q1 2026 GAAP EPS of $3.47 looks spectacular until you see it was driven by a $480 million SAP litigation settlement; strip that out and non-GAAP EPS was $0.88, and full-year non-GAAP EPS guidance is $2.53 to $2.57. The quarterly operating margin was actually negative 8.1% in Q1 before the settlement flowed through below the line. Anyone anchoring on the trailing P/E near 8 is valuing the company on a one-time legal windfall rather than its operating earnings power.
The competitive backdrop is the structural problem. The 10-K names the field directly: the market includes "AWS, Databricks, Google Cloud, Microsoft Azure, Snowflake, and more", alongside traditional legacy competitors, and flags the risk of "aggressive price discounting and the use of different pricing models by our competitors". Teradata is a smaller incumbent defending an installed base against hyperscalers and cloud-native platforms with vastly larger R&D budgets. The transition math is unforgiving: cloud ARR grew 13% but total ARR grew only 3%, meaning the legacy runoff is eating most of the cloud gains. If cloud growth decelerates before the legacy base stabilizes, total revenue keeps falling and the buyback is funding a managed decline, not a turnaround.
Valuation
Begin with the number that is not what it looks like. At $33.69 (July 11, 2026), Teradata's trailing P/E near 8 is flattered by a $480 million SAP litigation settlement that lifted GAAP EPS to $3.47 in Q1 2026; the operating earnings power sits at the roughly $0.88 non-GAAP quarterly level, with full-year non-GAAP EPS guided to $2.53 to $2.57. On that recurring basis the multiple is closer to the low-to-mid teens, still below the software sector, but not the deep-value bargain the reported figure implies. The two operating-income bases in the data (a record basis near $115 million and an EDGAR trailing basis near $103 million) sit only about 12% apart, which is the honest read; the divergence in reported net income is a below-the-line settlement, not margin compression.
The valuation methods agree the price is well supported, which is itself the finding. Every family, asset value, earnings power, peer multiples, and the growth-oriented method, lands at or above today's price, so this is a value-and-asset-supported name rather than a growth bet. Inverting the price says the market is paying about 25x company-wide operating income and implicitly assuming growth to sustain it, but the margin requirement is undemanding: the business only has to hold roughly the operating margin it already earns. The tension is that the methods reading the price as cheap are trailing lenses, while the forward guidance points to total revenue continuing to decline, so the cheapness is real only if the recurring, cloud-weighted base stabilizes.
Solvency removes the tail risk from the equation. The balance sheet is net cash, so there is no financial pressure on the way to whatever the transition delivers, and free cash flow of $670 million trailing (a 20% yield) funds both the $500 million repurchase authorization and continued cloud investment. The price is not stretched against any method; the debate is entirely about whether cloud ARR growth of 13% eventually outpaces the legacy runoff that is holding total ARR growth to 3%. The cash yield pays you to wait for that question to resolve, but the answer is not yet visible in the total revenue line.
Catalysts
Q1 2026 was defined by two things: a legal windfall and steady cloud momentum. Total revenue of $444 million rose 6.2% year over year and beat consensus, but GAAP EPS of $3.47 was heavily shaped by a $480 million SAP litigation settlement; non-GAAP EPS was $0.88. The operating metrics that matter for the transition: total ARR reached $1.492 billion (up 3% as reported, 2% in constant currency), and public cloud ARR of $686 million grew 13% as reported, consistent with the company's cloud-led mix shift.
Guidance frames the year as continued transition rather than inflection. Teradata maintained its FY2026 outlook for recurring revenue between minus 2% and flat, total revenue between minus 4% and minus 2%, and non-GAAP diluted EPS of $2.53 to $2.57, pointing toward the higher end. For Q2 2026 it guided recurring revenue minus 2% to flat and non-GAAP EPS of $0.53 to $0.57. The things to watch are whether cloud ARR growth holds in the low double digits, whether the legacy on-premises runoff decelerates enough to stabilize total ARR, and how quickly the company deploys the $500 million repurchase authorization that became effective in January 2026. The Q2 2026 report is the next checkpoint on the transition math.
Peer Cohorts (Per Segment, With Filing Citations)
Product Sales (reported)
- SNOW (SNOWFLAKE INC.)
- (no filing in the citation store)
- MDB (MONGODB, INC.)
- (no filing in the citation store)
- ORCL (Oracle Corp)
- (no filing in the citation store)
- DT (Dynatrace, Inc.)
- (no filing in the citation store)
Consulting Services (reported)
- SSNC (SS&C TECHNOLOGIES HOLDINGS, INC.)
- (no filing in the citation store)
- NICE (NICE LTD.)
- (no filing in the citation store)
- SPSC (SPS COMMERCE, INC.)
- (no filing in the citation store)
- MANH (MANHATTAN ASSOCIATES, INC.)
- (no filing in the citation store)
- BLKB (Blackbaud, Inc.)
- (no filing in the citation store)
- VERX (Vertex, Inc.)
- (no filing in the citation store)
- GTM (ZoomInfo Technologies Inc.)
- (no filing in the citation store)
- PCTY (PAYLOCITY HOLDING CORPORATION)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release · FY2025 10-K