Teledyne raises EPS outlook to $25.40–$25.50 as digital imaging grows
Key Facts
Teledyne Technologies raised its 2026 adjusted earnings per share outlook to a range of $25.40 to $25.50 as it reported third-quarter results on October 21, benefiting from growth in its digital imaging business. The new range compares with a previous forecast of $24.45 to $24.65 per share, according to the company's statement, and refers to adjusted non-GAAP earnings. Adjusted diluted earnings per share for the third quarter were $6.72, according to the same statement. The company reported quarterly net sales of $1,684.9 million. That represents growth of 9.4% from sales of $1,539.5 million in the third quarter of 2025, according to Investing's coverage of the results. For the full year, management said on the earnings call that it expects revenue of $6.625 billion. That estimate represents expected annual growth of 8.3%, according to management comments in the call transcript published by The Motley Fool.
In the digital imaging segment, sales totaled $903.0 million in the third quarter of 2026, according to Teledyne's statement. Segment sales rose 15% from the same period a year earlier, according to Investing's coverage of the earnings call. Organic growth in the business was 14.3% over the same period, alongside the segment's overall increase. Management attributed the acceleration in organic growth to demand for infrared detectors and systems used in space applications and unmanned platforms. Management identified "space applications and unmanned platforms" as a driver of that acceleration in its comments on the quarterly earnings call.
The improvement in digital imaging performance extended to profitability, with the segment's adjusted operating profit reaching $229.6 million in the third quarter, according to the company's statement. This measure excludes amortization of acquired intangible assets, according to the definition in Teledyne's results. Management said on the earnings call that the segment's adjusted operating margin rose 376 basis points year over year to 25.4%. The company's statement attributed the improvement in operating profit to higher sales and a favorable product mix. Across the company, the adjusted non-GAAP operating margin was 23.9%, while free cash flow totaled $319.5 million over the same quarter. In the market's response to the announcement, the shares rose 0.92% in premarket trading on October 21, according to Investing.
Against the backdrop of the results, Teledyne management said on the October 21 call that funded backlog totaled $5.3 billion. Orders exceeded sales for 12 consecutive quarters through the third quarter of 2026, according to Investing's analysis of the results. Alongside its growing backlog, the company has an agreement to acquire Varex Imaging, announced in August 2026. The total agreed transaction value is approximately $1.1 billion, according to Teledyne's official acquisition statement. That approximate value includes equity awards and net debt in the calculation of total transaction consideration.
For the fourth quarter of 2026, Teledyne expects adjusted earnings per share of $6.60 to $6.70, according to Investing's coverage of the earnings call. This range refers to non-GAAP earnings, as does the annual outlook announced by the company. On the acquisition process, a special meeting of Varex shareholders was scheduled for October 28, 2026, according to comments by Teledyne management on the call. Teledyne said in its acquisition statement that it expects to complete the transaction in "early 2027". Completion remains subject to closing conditions, including regulatory approvals and approval by Varex shareholders.