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Teradata Is A Company In Transition But It Is Still Worth A Look

May 21, 2018

Summary Points: 

- Management is transitioning Teradata into more of a subscription-based company and this shift has created headwinds when it comes to the company's operating results.

- However, the company reported Q1 2018 operating results that beat the consensus top- and bottom-line estimates.

- Teradata's stock is a long-term buy at today's price.

 

Teradata ($TDC) is a Dayton, Ohio-based technology company that is a global leader in analytic data solutions and services. The company helps customers better manage their data and analytics, in addition to assisting in extracting value out of big data (watch this video to learn more about Teradata's business). This sounds like a company that should be doing well in today's environment, right? Teradata's stock has indeed performed well lately (up ~40% over the last year) but TDC shares have significantly underperformed the broader market over the last three years.

 

The underperformance was caused by several factors, but I believe that the largest factor was related to management's failure to see the need to pivot and transition Teradata into a subscription-based company several years ago. Better late than never.

 

The impressive stock performance over the last year has been nice, of course, if you have been a shareholder, but I believe that Teradata is still a long-term buy today because the shift in business model will create a tremendous amount of shareholder value in the years ahead.

 

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