Teledyne Technologies Incorporated
Analysis
After three years in which a commercial slump hid the strength of its defense business, Teledyne's order book is finally turning into sales, and management has raised guidance twice this year. What matters now is how fast that backlog converts.How did the guidance raise split between defense and commercial?
- Orders have beaten sales for 11 quarters straight.
Q2 FY2026 book-to-bill was 1.23 and funded backlog reached about $5 billion. That is why management could raise the full-year sales and earnings outlook again in July rather than wait for the year to prove itself.How much of the $5 billion backlog turns into revenue this year?
- The commercial slump is ending, not just the defense boom.
Industrial machine vision, health-care X-ray and test and measurement all grew in Q2, and management lifted 2026 short-cycle growth from flat to mid-single digits. After three years of declines, they now lift the whole company.
- Part of the Q2 margin jump will not repeat.
Digital Imaging margin rose 353 basis points, but roughly 120 came from tariff refunds. Management raised revenue guidance again yet left its full-year margin outlook unchanged, so faster sales are not yet lifting profit at the same rate.Why did Teledyne leave its margin outlook unchanged while raising revenue?
- Defense backlog conversionThe bull case rests on defense orders that have outrun sales for many quarters and are only now turning into delivered revenue.
- Infrared sensors for drone makersTeledyne sells the infrared detectors and cameras that most Western drone and counter-drone makers build around, so demand reaches it through many programs at once.
- Commercial markets recoveringMachine vision, health care imaging and test equipment are growing again at the same time, which gives the company a second source of growth beside defense.
- Government award timingGrowth now depends more on government budgets and award schedules, which the company does not control and which can slip by several quarters.
- One-time margin helpPart of the recent margin improvement came from tariff refunds and cost cuts rather than from the businesses earning more on each sale.
- Rising acquisition pricesThe acquisition strategy that built the company is getting more expensive, with rivals bidding well above what Teledyne will pay for the same assets.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$1K | Jun 23 | Aug 22 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Mar 23 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 11 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 2 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$100K | Jan 6 | May 13 |
Congressional trading data provided by QuiverQuant
How Teledyne Technologies Incorporated turned $6.1B of revenue into $1.1B of operating income.
| Revenue | ||
|---|---|---|
| Digital Imaging | $3.2B | ▲ 3.03% YoY |
| Instrumentation | $1.5B | ▲ 5.39% YoY |
| Aerospace and Defense Electronics | $1.1B | ▲ 36.29% YoY |
| Engineered Systems | $435.7M | ▼ 0.93% YoY |
| Total revenue | $6.1B | |
| Gross profit | $2.6B | 42.8% |
| Operating income | $1.1B | 18.8% |