Company Overview
Teradata Corporation operates within the technology sector, specifically focusing on the software infrastructure industry, where it delivers AI and knowledge platforms designed to handle enterprise-grade workloads for clients in the United States and internationally. The company generates revenue through two primary segments, Product Sales and Consulting Services, with its AI platform serving as a core offering for complex data processing needs. At a macro level, Teradata is a significant entity in its niche, employing approximately 5,100 individuals and maintaining a total market capitalization of $2.50 billion. These financial dimensions indicate that while the company possesses a substantial operational footprint, its market valuation suggests a specific positioning within the broader technology landscape that balances established infrastructure presence with the capital requirements of a mid-to-large-cap enterprise.
Financial Health
The company reported total revenue of $1.66 billion over the trailing twelve months, generating a net income of $130.00 million and an EBITDA of $297.00 million. The substantial difference between the $1.66 billion in revenue and the $130.00 million in net income highlights a significant cost structure where operating expenses, including cost of goods sold and administrative costs, consume roughly 92.2% of top-line revenue before interest and taxes. Teradata produced $274.38 million in free cash flow, which provides a robust foundation for financial flexibility, allowing management to fund operations, service debt obligations, or pursue strategic initiatives without relying heavily on external financing. Profitability is reflected across three key margins: a gross margin of 59.8% indicates efficient product pricing and production costs, an operating margin of 13.8% shows the effectiveness of overhead management, and a profit margin of 7.8% demonstrates the final bottom-line retention after all expenses. Regarding liquidity and leverage, the firm holds $493.00 million in cash against $557.00 million in total debt, resulting in a debt-to-equity ratio of 242.17, which suggests a leveraged balance sheet where equity capital is relatively small compared to debt obligations. Short-term liquidity is assessed via a current ratio of 0.92, indicating that current assets are slightly below current liabilities, which requires careful management of working capital to meet immediate obligations. Management effectiveness is further illuminated by a return on equity of 71.6% and a return on assets of 7.5%, metrics that reveal how efficiently the company utilizes shareholder capital and its total asset base to generate profits.
Valuation Assessment
Valuation multiples for Teradata include a trailing twelve-month P/E ratio of 19.87 and a forward P/E of 9.55. The notable disparity between these two figures implies that the market anticipates a significant acceleration in earnings growth, as the forward multiple is less than half of the trailing multiple. The price-to-book ratio stands at 10.79, indicating that the stock trades at a substantial premium relative to its net asset value, suggesting investors value the intangible assets and future earnings potential more than the book equity. Alternative valuation metrics such as a price-to-sales ratio of 1.50 and an EV/EBITDA of 8.54 provide additional context, showing that the company is priced at 1.5 times its annual sales while earning 8.54 times its enterprise value adjusted for earnings before interest, taxes, depreciation, and amortization. In terms of price range, the stock has fluctuated between a 52-week low of $18.43 and a 52-week high of $41.78, meaning the current price sits significantly below the recent peak and above the recent trough, reflecting volatility within the year. The beta value of 0.54 indicates that the stock's price volatility is historically lower than the broader market, suggesting it may be less sensitive to general market swings than the average technology stock.
Growth & Income
Growth metrics show a revenue increase of 2.9% year-over-year contrasted with a much higher earnings growth rate of 56.0% year-over-year. This divergence implies that earnings are growing significantly faster than revenue, likely driven by margin expansion or one-time gains rather than proportional top-line expansion. Teradata does not pay dividends, evidenced by a dividend yield of N/A and a payout ratio of 0.0%, which means the company reinvests all of its net income back into the business to fund operations, research, or acquisitions rather than distributing cash to shareholders. Consequently, the overall growth and income profile is characterized by capital retention for internal expansion, relying on operational leverage to drive returns rather than providing current income to investors.