SerpApi.Org
Key Points
- Interested in Teledyne Technologies Incorporated? Here are five stocks we like better.
- Teledyne posted record quarterly results, with second-quarter sales up 9.8% and non-GAAP earnings up 20.8% year over year. Orders beat sales for the 11th straight quarter, and backlog ended the period at about $5 billion.
- The company raised its full-year 2026 outlook for both revenue and earnings, now expecting revenue to rise just under 7% to more than $6.53 billion. It also lifted its non-GAAP EPS forecast and sees stronger growth across both commercial and defense businesses.
- Digital Imaging was the top growth driver, with sales up 12.7% and segment margin expanding to 25%. Teledyne also highlighted growing demand in unmanned systems, space, missiles and other defense-related markets, while cash flow improved and leverage fell to its lowest level in six years.
Teledyne Technologies (NYSE:TDY) reported what Executive Chairman Robert Mehrabian called the strongest quarterly orders, sales and operating profit in the company's history, driven by broad growth across defense and commercial markets and particular strength in its Digital Imaging segment.
On the company's second-quarter 2026 earnings call, Mehrabian said sales increased 9.8% and non-GAAP earnings rose 20.8% from the prior year. Orders exceeded sales for the 11th consecutive quarter, and Teledyne ended June with approximately $5 billion of funded backlog.
"Our second quarter performance reflected strong execution of the backlog we've been building for almost three years," Mehrabian said, adding that the results also reflected the breadth of Teledyne's portfolio, including sensors and vertically integrated platforms "from space to deep sea."
Teledyne Raises Full-Year Outlook
Teledyne raised its 2026 annual revenue outlook by $120 million compared with its April forecast. Mehrabian said the company now expects full-year revenue to rise just under 7% to more than $6.53 billion.
The company also lifted its full-year non-GAAP earnings outlook by $0.55 per share at the midpoint of the prior range, citing stronger organic growth. Steve Blackwood, executive vice president and chief financial officer, said management expects full-year 2026 GAAP earnings per share of $20.73 to $20.99 and non-GAAP earnings per share of $24.45 to $24.65.
For the third quarter, Teledyne expects GAAP earnings per share of $5.10 to $5.25 and non-GAAP earnings per share of $6.05 to $6.15.
Mehrabian said markets that had faced headwinds, including industrial inspection and healthcare, have begun to improve. The company previously expected flat to low-single-digit growth in short-cycle businesses, but now expects mid-single-digit growth across its commercial portfolio for the year. Defense orders and sales have also accelerated, with 2026 defense sales expected to grow at high-single-digit rates, including "pockets of double-digit growth."
Digital Imaging Leads Segment Growth
President and Chief Executive Officer George Bobb said Digital Imaging sales increased 12.7% in the second quarter, including 11.9% organic growth, due to balanced gains across defense and commercial businesses.
Sales of infrared detectors for space-based imaging rose more than 20%, as did revenue from infrared subsystems and cameras used in unmanned air systems, unmanned maritime surface vessels, border security and drone defense applications. Bobb also said sales increased in larger commercial end markets, including industrial and scientific vision, healthcare X-ray products, thermography cameras, maritime navigation electronics and micro electromechanical systems, or MEMS.
Digital Imaging non-GAAP operating margin rose 353 basis points to 25%. Bobb said tariff refunds helped the margin, but the benefit was nearly offset in dollar terms by higher research and development expense, inventory reserves and other accruals. In response to an analyst question, Bobb said the tariff benefit, net of other one-time items, was about $10 million in the quarter, mostly in Digital Imaging, and contributed a little more than 100 basis points to that segment's margin improvement.
Other Segments Post Growth
Instrumentation sales rose 5.5% from a year earlier. Marine instruments increased 5.7%, helped by defense-related sales of unmanned subsea vehicles for anti-submarine warfare and mine countermeasures, as well as interconnects for U.S. Virginia and Columbia submarines. Bobb said those defense-related marine areas collectively grew about 20%.
Environmental instruments sales increased 6%, aided by the first full quarter of DD-Scientific, acquired in January, as well as organic growth in gas and flame detection instrumentation. That was partly offset by lower sales of laboratory and life sciences instruments. Test and measurement systems sales increased 4.3%, with greater year-over-year orders for oscilloscopes and protocol analyzers.
Aerospace and Defense Electronics sales increased 8.2%, with broad organic growth across defense electronics and the highest growth at Qioptiq, which Teledyne acquired in early 2025. Commercial aerospace sales increased slightly despite delays in larger avionics retrofit opportunities.
Engineered Systems revenue increased 8.4%, while segment operating margin improved 166 basis points, driven primarily by commercial nuclear power and U.S. missile defense programs.
Defense, Space and Unmanned Systems Remain Key Themes
During the question-and-answer portion of the call, Mehrabian said overall second-quarter book-to-bill was 1.23, led by Digital Imaging at more than 1.4. He said many defense orders were multi-year in nature, while the company's increased revenue outlook for 2026 reflected gains across both defense and commercial products.
Asked about unmanned and space businesses, Mehrabian said both increased more than 10%. He later said Teledyne's unmanned business, including air, ground and underwater systems, was about $500 million in 2025 and is expected to be about $575 million this year. He said roughly $400 million of the 2025 unmanned revenue was in Digital Imaging, primarily air systems with some ground exposure, while underwater represented about $100 million.
Mehrabian also said the space business is expected to be more than $400 million, "maybe $450 million," by year-end. He cited Teledyne's mercury cadmium telluride detectors and said the company is a primary supplier to many participants in the Golden Dome program.
On missiles and munitions, Mehrabian estimated Teledyne's run-rate revenue at $200 million to $250 million for microwave and energetic components and subsystems, with related programs in electronic warfare and radar. He said Teledyne participates in programs including AMRAAM, PAC-3, Hellfire, Javelin and new work in hypersonics.
Cash Flow and Capital Deployment
Blackwood said second-quarter cash flow from operating activities was $315.2 million, up from $226.6 million a year earlier. Free cash flow was $284.7 million, compared with $196.3 million in the prior-year quarter. Teledyne ended the quarter with $1.69 billion of net debt, consisting of about $2.03 billion of debt less $340 million of cash.
Mehrabian said leverage is at its lowest level in six years and that Teledyne has "more than ample flexibility" to deploy capital. He said about 90% of current earnings come from businesses Teledyne has acquired over the past 25 years, and the company continues to evaluate acquisitions across both defense and commercial areas. However, he said Teledyne is not willing to pay what he described as "crazy prices" in some competitive deal processes.
Looking ahead, Mehrabian said Teledyne is being cautious in its guidance because of factors including tougher fourth-quarter comparisons in Digital Imaging, supply chain concerns involving germanium and rare earth magnets, oil price volatility and possible tariff changes. Still, he said most of the company's markets are moving in a positive direction.
About Teledyne Technologies (NYSE:TDY)
Teledyne Technologies (NYSE: TDY), headquartered in Thousand Oaks, California, is a diversified industrial technology company that designs, manufactures and supports sophisticated electronic systems, instruments and imaging products. Founded in 1960 by Henry Singleton and George Kozmetsky, Teledyne has grown into a multinational provider of high-performance equipment and software for commercial, scientific and government customers. Its offerings are used in markets that include aerospace and defense, marine, industrial manufacturing, environmental monitoring and scientific research.
The company operates through businesses that develop precision instrumentation, digital imaging products, engineered systems and aerospace and defense electronics.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
Read More
- The Top Five Stocks to Own in August
- A Boring Dividend Growth Strategy Becomes a Solid Defensive Play
- Boxabl Disrupts Housing With A Tiny Float IPO
- Robotaxi Mode Engaged: Tesla Starts Monetizing Its Florida Fleet
- Velo3D Forges a New Reality After Its Sharp Stock Sell-Off
- Why Apple Could Be the Last One Standing in the Tech Wreck
