TELEDYNE TECHNOLOGIES INC (TDY): what the price requires

At today's price, TELEDYNE TECHNOLOGIES INC (TDY) is priced for today's economics sustained for ~5.1 years. 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/TDY

Headline

FieldValue
TickerTDY
CompanyTELEDYNE TECHNOLOGIES INC
Sector / IndustryIndustrials / Aerospace & Defense
Current price$624.45/sh
CompositionDigital Imaging 52% / Instrumentation 24% / Aerospace and Defense Electronics 17% / Engineered Systems 7%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed12.3%
Operating margin today18.4%
Margin compression implied-6.1pp
Must persist for5.1y
Multiple paid28x 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% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.92σ
cohort percentile (of 225 peers)64
sustained it ~5.1 years at this level30%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

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.

FamilyMedian price/FVModelsReads
Asset2.98x5expensive
Earnings3.25x5expensive
Relative1.90x5expensive
Growth1.30x3expensive

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$479.761.30xyesFCF base $1.1B, growth 8% (input: historical growth), terminal g 4.0%, WACC 8.4%, 6yr projection
DCF Exit MultipleGrowth$561.901.11xyesExit EV/EBITDA: 22.9x / 24.9x / 26.9x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$445.571.40xyesP/E 22x (static sector reference · 2026-04), scenarios: 18.3x / 22.0x / 25.7x (bear / base = reference held flat / bull), EV/EBITDA 17.26x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$215.522.90xyesBV/sh $228.73, ROE (TTM) 8.7%, ke 9.3%
Two-Stage Excess ReturnAsset$209.232.98xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$449.471.39xyesRev $6.2B, growth 8% (input: historical growth; tapered), Terminal P/S: 3.9x / 4.7x / 5.5x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$305.922.04xyesEPS $19.74, growth 15% (input: historical EPS growth), PEG=2.02 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$131.254.76xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.99B × (1−19%) / WACC 8.4% → EPV (no growth)
Residual IncomeAsset$208.183.00xyesBV $228.73 + 5yr PV of (ROE (TTM) 8.7% − Kₑ 9.3%) × BV; BV grows 5.7%/yr
Graham NumberAsset$318.731.96xyes√(22.5 × EPS $19.74 × BVPS $228.73) — Graham's conservative floor
EV/EBITDA RelativeRelative$329.091.90xyesEBITDA $1.27B × sector EV/EBITDA 14.0x
FCF YieldEarnings$192.023.25xyesFCF $1053.7M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$185.693.36xyesSBC-adj FCF $1.03B (FCF $1.05B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$636.940.98xyesEPS $19.74 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$49.5012.62xyesBV $228.73 × (ROIC 1.8% / WACC 8.4%)
P/Sales SectorRelative$266.052.35xyesRevenue $6.23B × sector P/S 2.0x
PEG Fair ValueRelative$458.891.36xyesEPS $19.74 × (PEG 1.5 × growth 15.5% (input: historical EPS growth)) → PE 23.2x
Earnings YieldEarnings$213.412.93xyesEPS $19.74 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.0b
Net debt / NOPAT (after-tax)2.16x
Net debt / operating income (pre-tax)1.75x
Interest coverage18.6x
Share count CAGR (buyback)-0.5%
Burning cashno

Bullet Takeaways

Bull Case

The bull case has to reckon with where the price sits relative to the methods, because that gap is unusually wide and it is the reason the stock is not obviously a buy at any price the models endorse. Every valuation family reads Teledyne as rich, and that spread is precisely what a durable serial compounder commands: investors have watched this management team buy niche technology businesses, integrate them, and grow the whole for years, and they pay up for the track record rather than the trailing multiple. The quality underneath is real. Gross margin holds steady above 42%, operating margin runs near 19%, free cash flow converts at 113% of net income, and the Altman score of 4.96 sits comfortably in safe territory.

The portfolio is the moat. Teledyne's four segments serve defense electronics, space and infrared imaging, instrumentation, and engineered systems, markets where the company holds specialized, often sole-supplier positions rather than commodity share. Digital Imaging, the largest segment, posted a book-to-bill of 1.38 in Q1 2026, meaning orders are running well ahead of sales, a leading indicator of growth. The visibility extends further out: the FY2025 10-K reports remaining performance obligations (contracted backlog) of "$4,611.7 million" as of December 28, 2025, with about 71% expected to convert to revenue within a year. That is a large, visible base of future revenue.

The capital engine is running with room to spare. Q1 2026 delivered record net sales of $1.56 billion up 7.6%, and management raised full-year non-GAAP EPS guidance to $23.85 to $24.15, citing organic growth in digital imaging, infrared systems for space and defense, and recent acquisitions. Leverage reached a five-year low, giving the company significant firepower for its tuck-in and mid-sized acquisition strategy, and it bought back $405.8 million of stock over the trailing year. The bull case is that the compounding machine keeps working, and the premium the methods flag is simply what the market pays for a proven capital allocator with a deep, defensible portfolio.

Bear Case

The bear case begins with the markets Teledyne sells into, because several of them are being reshaped by faster-moving competitors and cyclical forces the company does not control. The FY2025 10-K is explicit that it sells "in markets that are cyclical in nature and a downturn in one or more of these markets could materially impact our financial results", spanning defense electronics, instrumentation, digital imaging, energy exploration, commercial aviation, and semiconductors. Digital imaging and sensor technology in particular is an arena where semiconductor-scale players and specialized rivals invest heavily; a conglomerate spread across four segments cannot out-spend focused competitors in every niche it occupies, and the risk is gradual share erosion in the segments where the technology moves fastest.

The acquisition strategy that drives the growth also carries the disruption risk inward. The 10-K cautions that acquisitions "involve various inherent risks, such as, among others, our ability to integrate acquired businesses, retain key management" and realize expected value. A roll-up of niche technology businesses is only as good as its ability to keep those businesses competitive after purchase, and the more the underlying markets get disrupted, the harder integration and retention become. Teledyne has executed well historically, but the model depends on continuously finding and absorbing targets faster than its existing portfolio ages, and the 10-K itself provides "no assurance as to when, if or on what terms any acquisitions will be made".

The valuation removes any cushion for these risks to play out. No valuation family reaches the price: the stock is rich on assets, on earnings power, on peer multiples, and even on the forward-growth method, and its multiple sits at the very top of the aerospace-and-defense peer distribution, well beyond the upper quartile. The market is paying about 28x company-wide operating income and, in effect, assuming Teledyne holds near-peak growth for roughly five more years, a persistence only about 29% of comparable fast-growers have achieved. When the price is a bet beyond what any standard frame supports, even modest disappointment in one large segment, or a stretch without an accretive deal, can compress both the earnings and the premium multiple at once.

Valuation

The defining fact about Teledyne's valuation is that no method reaches the price. At $634.31 (July 11, 2026), the asset-based lens, the earnings-power lens, the peer-multiple lens, and even the forward-growth method all land below the price, the first two by more than three times. That configuration is rare and it is the whole finding: the market is paying a premium that no standard frame supports, and the multiple sits at the very top of the aerospace-and-defense peer distribution, well beyond the upper quartile. The spread is the price of the market's confidence in the serial-compounder model, not a number any model produces.

Inverting the price says the same thing from the other side. The market is paying about 28x company-wide operating income and, effectively, assuming Teledyne sustains growth near its self-funding ceiling for roughly five years. The margin requirement is not the issue, the business only has to hold a fraction of the roughly 19% operating margin it earns today, so the demand is on duration and continued execution, not on margin expansion. The backlog gives that assumption some real support: the FY2025 10-K reports remaining performance obligations of "$4,611.7 million" with about 71% converting within a year, and the digital-imaging book-to-bill of 1.38 points to continued order strength. But contracted backlog covers roughly a year, not the five the price assumes.

Solvency is a strength and it is what funds the model. Leverage is moderate and well covered, debt-to-equity is 0.27, and management noted leverage reached a five-year low, giving significant room for the tuck-in and mid-sized acquisitions that drive the growth. Free cash flow converts above net income and the company repurchased $405.8 million of stock over the trailing year. The valuation therefore does not rest on any survival or balance-sheet question; it rests entirely on whether Teledyne keeps executing the acquire-integrate-compound playbook at a pace that justifies a price the methods say is already beyond them. The business is excellent; the price assumes the excellence continues without interruption.

Catalysts

Q1 2026, reported April 22, was a record-and-raise quarter. Teledyne posted record net sales of $1.56 billion, up 7.6% year over year, with GAAP diluted EPS of $4.85 (up 20.3% from $3.99) and non-GAAP EPS of $5.80 ahead of expectations. Digital Imaging, the largest segment, generated $816.9 million in sales up 7.9% with $141.7 million of operating income and a book-to-bill ratio of 1.38, a strong forward demand signal. Recent acquisitions added $33.3 million of incremental sales in the quarter.

Management raised full-year 2026 guidance, lifting GAAP diluted EPS to $20.08 to $20.44 and non-GAAP diluted EPS to $23.85 to $24.15, citing organic growth in digital imaging, infrared systems for space and defense applications, and acquisition contributions. The strategic story is the balance-sheet capacity: leverage reached a five-year low, positioning the company for tuck-in and mid-sized acquisitions. The items to watch are the pace and size of new deals given that firepower, whether the digital-imaging book-to-bill stays above 1.0 as a growth indicator, defense and space demand trends that feed the infrared and electronics segments, and conversion of the roughly $4.6 billion contracted backlog. The next quarterly report is the immediate checkpoint on execution against the raised guidance.

Peer Cohorts (Per Segment, With Filing Citations)

Digital Imaging (reported)

Instrumentation (reported)

Aerospace and Defense Electronics (reported)

Engineered Systems (reported)

Methodology Note

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

View the full interactive TDY report on boothcheck