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Teledyne: Doubling Down On Digital Imaging With FLIR


  • Teledyne has been a serial acquirer, as savvy deals and a sound positioning have created great value for long-term investors.
  • Despite Covid-19, valuation has only increased; in fact, quite a bit.
  • Breaking with its tradition of pursuing in bolt-on acquisitions, the company started 2021 with a huge $8 billion deal for FLIR.
  • This deal looks compelling on a relative basis, yet the overall valuation remains quite demanding, too demanding.
  • Looking for more investing ideas like this one? Get them exclusively at Value In Corporate Events. Learn More »

Teledyne (NYSE:TDY) is a long-term value creator, one which started 2021 with a big bang as it announced the $8.0 billion acquisition of FLIR Systems (FLIR) back in January already. Both companies have been on my investment radar in recent years as I have been quite constructive on both names for quite a while, although their quality did come at a price.

My last take on Teledyne was in the summer of 2019 when the company acquired some assets on the cheap from 3M (MMM). With shares trading at $250 at the time or 30 times earnings, I applauded the quality yet looked for more appeal at an entry point around the $200 mark. As it turned out, we have never seen that entry target as shares traded within reach of the $400 mark in the weeks ahead of Covid-19. Despite a fierce and short pullback, shares have made up all lost ground, currently trading essentially at an all-time high of $417 per share.

The Old Thesis

Teledyne is a conglomerate focused on technologies, allowing for sensing, gathering, transmission, and analysis of information. Back in 2019, when I looked at the company the industrial conglomerate generated $3 billion in sales from a variety of sectors and geographic regions.

With a strong focus on instrumentation and digital imaging, this R&D powerhouse was very profitable and had grown sales at a steady and impressive pace. With 61 deals made in the period 2000-2019, the company quadrupled its sales as it announced a $230 million deal with 3M to acquire $102 million in additional sales on top of that in the summer of 2019.

As shares were trading around $250 at the time, I pegged the enterprise value at around $10 billion, at 3.3 times sales, 19 times EBITDA, and 27-28 times earnings. The impact of the latest deal announcement

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This article was written by

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Finding value that gets unlocked in M&A, IPOs and other corporate events
The writer is a long term value investor and M.Sc graduate in Financial Markets with over 10 years experience. Value can be found in both long and short ideas and uses options to enhance the risk-return profile of investment ideas. Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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