Critical Comparison: Teradyne (NASDAQ:TER) and Star Group (NYSE:SGU)

Teradyne (NASDAQ:TER) and Star Group (NYSE:SGU) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Teradyne and Star Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Teradyne	0	3	12	1	2.88
Star Group	0	0	1	0	3.00

Teradyne currently has a consensus target price of $390.53, indicating a potential upside of 20.11%. Given Teradyne’s higher probable upside, equities research analysts clearly believe Teradyne is more favorable than Star Group.

Dividends

Teradyne pays an annual dividend of $0.52 per share and has a dividend yield of 0.2%. Star Group pays an annual dividend of $0.79 per share and has a dividend yield of 6.0%. Teradyne pays out 9.6% of its earnings in the form of a dividend. Star Group pays out 35.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Teradyne has raised its dividend for 1 consecutive years and Star Group has raised its dividend for 13 consecutive years. Star Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

99.8% of Teradyne shares are held by institutional investors. Comparatively, 40.4% of Star Group shares are held by institutional investors. 0.2% of Teradyne shares are held by company insiders. Comparatively, 20.4% of Star Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Teradyne and Star Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Teradyne	$3.19 billion	15.96	$554.05 million	$5.40	60.21
Star Group	$1.78 billion	0.24	$73.50 million	$2.23	5.90

Teradyne has higher revenue and earnings than Star Group. Star Group is trading at a lower price-to-earnings ratio than Teradyne, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Teradyne has a beta of 1.74, meaning that its stock price is 74% more volatile than the S&P 500. Comparatively, Star Group has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Profitability

This table compares Teradyne and Star Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Teradyne	22.55%	31.79%	22.36%
Star Group	5.31%	28.64%	9.59%

Summary

Teradyne beats Star Group on 14 of the 18 factors compared between the two stocks.

About Teradyne

Teradyne, Inc. designs, develops, manufactures, and sells automated test systems and robotics products worldwide. It operates through four segments; Semiconductor Test, System Test, Robotics, and Wireless Test. The Semiconductor Test segment offers products and services for wafer level and device package testing of semiconductor devices in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game, and other applications. This segment also provides FLEX test platform systems; J750 test system to address the volume semiconductor devices, including microcontrollers; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. It serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and semiconductor assembly and test providers. The System Test segment offers defense/aerospace test instrumentation and systems; storage and system level test systems; and circuit-board test and inspection systems. The Wireless Test segment provides wireless test solutions for silicon validation, wireless module manufacturing, and wireless end device manufacturing under the LitePoint brand. This segment also offers IQxel-MX and IQxel-MW7G series products for edge measurement performance in the manufacturing of connectivity products; IQxstream-5G and IQgig-5G family products to support 4G and 5G technologies; and IQgig-UWB+ for certification and manufacturing test support for ultra wideband products. The Robotics segment provides collaborative robotic arms, autonomous mobile robots, and advanced robotic control software for manufacturing, logistics, and industrial customers. The company was incorporated in 1960 and is headquartered in North Reading, Massachusetts.

About Star Group

Star Group, L.P., together with its subsidiaries, provides home heating oil and propane products and services to residential and commercial customers in the United States. It offers gasoline and diesel fuel; and installs, maintain, and repairs heating and air conditioning equipment. As of September 30, 2023, the company served approximately 402,200 full service residential and commercial home heating oil and propane customers and 52,400 customers on a delivery only basis. It also sells gasoline and diesel fuel to approximately 26,600 customers. The company was formerly known as Star Gas Partners, L.P. and changed its name to Star Group, L.P. in October 2017. Star Group, L.P. was incorporated in 1995 and is based in Stamford, Connecticut.