Teledyne FLIR Bags $17.5 Mln Contract To Supply Black Hornet 4 Nano-Drones

Teledyne’s fourth quarter results received a positive market reaction, reflecting management’s focus on higher-margin defense and imaging businesses as well as continued recovery in commercial segments. CEO George Bobb credited robust performance at Teledyne FLIR, citing “infrared imaging components and subsystems, many of which are used in our customers’ unmanned systems, increased over 20%.” The quarter was also supported by record sales of marine instrumentation and strong execution across long-cycle defense programs. Management pointed to operational cost controls and the impact of recent acquisitions as key contributors to margin improvement.

Teledyne (TDY) Q4 CY2025 Highlights:

• Revenue: $1.61 billion vs analyst estimates of $1.57 billion (7.3% year-on-year growth, 2.5% beat)
• Adjusted EPS: $6.30 vs analyst estimates of $5.83 (8% beat)
• Adjusted EBITDA: $470 million vs analyst estimates of $396.3 million (29.2% margin, 18.6% beat)
• Adjusted EPS guidance for the upcoming financial year 2026 is $23.65 at the midpoint, in line with analyst estimates
• Operating Margin: 20.4%, up from 15.8% in the same quarter last year
• Organic Revenue rose 2.5% year on year (beat)
• Market Capitalization: $28.92 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Teledyne’s Q4 Earnings Call

• Greg Konrad (Jefferies) asked about the split between organic and inorganic growth for 2026; Executive Chairman Robert Mehrabian responded that most growth would be organic at around 3.6%, with smaller contributions from recent acquisitions.
• Zach Waljasser (UBS) inquired about the cadence of earnings growth throughout the year; Mehrabian explained that easier Q1 comparisons would drive stronger early growth, with typical seasonality expected over the full year.
• Andrew Buscaglia (BNP Paribas) sought details on the size and margin profile of the tracking layer satellite contract; CEO George Bobb estimated over $100 million in revenue across several years and noted margins would be close to the corporate average.
• Rob Jamieson (Vertical Research Partners) questioned the outlook for the test and measurement segment; Mehrabian and Bobb cited ongoing strength in specialty oscilloscopes and demand from automotive and data center markets, with protocol analyzers expected to rebound later in the year.
• Joe Giordano (TD Cowen) raised concerns about memory price increases and potential risks; Mehrabian said net risk was minimal due to offsetting benefits from sales into memory supplier end markets.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be tracking (1) the pace of defense contract execution, particularly for unmanned systems and missile tracking satellites, (2) signs of continued stabilization and growth in short-cycle commercial businesses, and (3) the integration and performance of newly acquired businesses such as Didi Scientific. Additionally, capital deployment decisions between acquisitions and share repurchases will serve as a key indicator of management’s strategic flexibility.

Teledyne currently trades at $616.50, up from $566.23 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

Digital imaging and instrumentation provider Teledyne reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 7.3% year on year to $1.61 billion. Its non-GAAP profit of $6.30 per share was 8% above analysts’ consensus estimates.

Teledyne (TDY) Q4 CY2025 Highlights:

• Revenue: $1.61 billion vs analyst estimates of $1.57 billion (7.3% year-on-year growth, 2.5% beat)
• Adjusted EPS: $6.30 vs analyst estimates of $5.83 (8% beat)
• Adjusted EBITDA: $470 million vs analyst estimates of $396.3 million (29.2% margin, 18.6% beat)
• Adjusted EPS guidance for the upcoming financial year 2026 is $23.65 at the midpoint, in line with analyst estimates
• Operating Margin: 20.4%, up from 15.8% in the same quarter last year
• Organic Revenue rose 2.5% year on year (beat)
• Market Capitalization: $29.19 billion

StockStory’s Take

Teledyne’s fourth quarter results received a positive market reaction, reflecting management’s focus on higher-margin defense and imaging businesses as well as continued recovery in commercial segments. CEO George Bobb credited robust performance at Teledyne FLIR, citing “infrared imaging components and subsystems, many of which are used in our customers’ unmanned systems, increased over 20%.” The quarter was also supported by record sales of marine instrumentation and strong execution across long-cycle defense programs. Management pointed to operational cost controls and the impact of recent acquisitions as key contributors to margin improvement.

Looking ahead, Teledyne’s guidance for 2026 is anchored by expectations for stable growth across both long-cycle and short-cycle businesses. Executive Chairman Robert Mehrabian stated, “We do not believe over the years…the total year in 2026, we are going to see shrinkage of our short cycle businesses that we have before.” Management highlighted the pipeline in unmanned systems and defense awards, such as participation in the U.S. Space Agency’s tracking satellite contracts, as foundational to future performance. The company also aims to leverage recent acquisitions and maintain financial flexibility for both tuck-in deals and internal investment.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to strength in defense and imaging, underpinned by acquisitions and disciplined capital allocation.

• Defense segment momentum: Teledyne’s defense businesses remained healthy, with notable new awards including a production contract under the Marine Corps’ OPFL loitering munition program and strong demand for space-based infrared detectors used in missile tracking satellites.
• Imaging business outperformance: The digital imaging segment, led by Teledyne FLIR, saw growth from infrared imaging for unmanned systems and industrial applications. Management highlighted over 20% growth in FLIR’s infrared components and continued demand for surveillance products.
• Marine instrumentation records: Marine instrumentation achieved record sales of autonomous underwater vehicles, driven by U.S. Navy and European contracts. These vehicles support both defense and commercial applications, ranging from anti-submarine warfare to environmental monitoring.
• Acquisition strategy execution: Teledyne continued its “string of pearls” approach with the acquisition of Didi Scientific, a UK-based gas sensor manufacturer, adding high-recurring consumable revenue to its environmental instruments portfolio.
• Balanced capital deployment: Management pointed to opportunistic stock repurchases and $850 million in acquisitions for the year, while maintaining a low leverage ratio and emphasizing flexibility for future investments.

Drivers of Future Performance

Teledyne expects broad-based organic growth across segments in 2026, supported by defense backlog and early recovery in commercial markets.

• Defense and space contract pipeline: Management emphasized multi-year visibility from recent wins in missile tracking satellites and unmanned defense systems, with new contracts expected to begin revenue contribution in 2026 and beyond.
• Short-cycle business stabilization: After prior contraction, short-cycle businesses such as industrial machine vision and test instrumentation are forecast to stabilize, with management projecting low single-digit growth as end-market demand gradually recovers.
• Capital allocation flexibility: The company plans to balance further “tuck-in” acquisitions and internal R&D investment, while maintaining capacity for opportunistic stock repurchases, depending on the valuation environment and acquisition opportunities.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be tracking (1) the pace of defense contract execution, particularly for unmanned systems and missile tracking satellites, (2) signs of continued stabilization and growth in short-cycle commercial businesses, and (3) the integration and performance of newly acquired businesses such as Didi Scientific. Additionally, capital deployment decisions between acquisitions and share repurchases will serve as a key indicator of management’s strategic flexibility.

Teledyne currently trades at $622.64, up from $566.23 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

What Happened?

Shares of digital imaging and instrumentation provider Teledyne jumped 9% in the afternoon session after the company reported fourth-quarter financial results that surpassed Wall Street's expectations for both revenue and profit. 

The company's revenue for the quarter was $1.61 billion, up 7.3% year on year and ahead of estimates. Profitability was also a bright spot, with adjusted earnings of $6.30 per share easily topping the consensus of $5.83. This was driven by a significant expansion in the operating margin, which rose to 20.4% from 15.8% in the prior year's quarter, indicating greater efficiency. To top it off, Teledyne's initial earnings guidance for the full year 2026 met analyst expectations, signaling a stable outlook.

What Is The Market Telling Us

Teledyne’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 16 days ago when the stock gained 2.2% on the news that its subsidiary, Teledyne FLIR OEM, announced the launch of Tura, a new thermal camera designed for advanced driver-assistance systems (ADAS) and autonomous vehicles (AVs). 

The Tura was presented as the first thermal longwave infrared camera developed in compliance with key automotive safety standards. It was purpose-built to improve vehicle perception for night vision and self-driving functions. The camera featured a high-performance sensor with industry-leading sensitivity, which was critical for detecting pedestrians, animals, and other road users in complete darkness or through challenging conditions like fog, smoke, and sun glare. This news arrived as reports also pointed to the company's strong financial health, noting its outstanding profitability and solid financial condition compared to industry rivals.

Teledyne is up 18.8% since the beginning of the year, and at $616.34 per share, has set a new 52-week high. Investors who bought $1,000 worth of Teledyne’s shares 5 years ago would now be looking at an investment worth $1,590.