Teradata Corporation (TDC)
UndervaluedFundamental
67
Price
$29.52
Market Cap
$2.74B
Part 1 · What the company is worth
Overview
Teradata sells software that large companies use to store, organize and analyze their data, plus the consulting work needed to set it up. It began as a maker of specialized database hardware and has been converting that installed base into a subscription business that runs on the cloud or on a customer's own servers. Customers are mostly large enterprises — banks, retailers, telecoms — with data volumes too big and complex for off-the-shelf tools.
How it makes money
The company is mid-transition from one-time hardware and perpetual license sales to recurring subscriptions billed monthly to multi-year, whether run in the cloud or on-premises. Recurring revenue reached 87% of the total in fiscal 2025, up from 84% a year earlier, so most revenue now renews automatically rather than being re-sold each cycle. Consulting services, billed for implementation and migration work, make up the rest alongside a shrinking sliver of upfront hardware and perpetual-license sales.
Revenue by segment
Recurring subscription revenue from cloud and on-premises data platforms, plus the remaining perpetual software licenses and hardware sold upfront.
Implementation, migration and advisory services billed to help customers set up and run the platform.
Competitive moat
Switching costs · NarrowOnce a large enterprise has built years of reporting, pipelines and analytics on top of Teradata, ripping it out is a multi-year, high-risk project, which keeps existing customers paying subscriptions. The moat is narrower than it looks because cloud-native rivals now win most new workloads outright, so the switching cost protects the installed base rather than growing it.
What drives demand
Moderately cyclicalSubscription revenue renews on multi-year terms, which smooths results compared to a pure license business, but new bookings depend on enterprise IT budgets that tighten in a downturn and on customers actually completing their migration to the cloud platform rather than delaying it.
Key risks
- Late and lagging cloud transition — Teradata entered the cloud data-platform market later than rivals such as Snowflake and Databricks, which have taken significant market share. Cloud net expansion has slowed year over year, evidence the transition has not fully offset the erosion of the legacy on-premises business.
- Intense competition and pricing pressure — The company describes the data-platform market as intensely competitive, with rapid technology change and frequent price reductions from rivals, which can force Teradata to cut prices or lose deals to newer entrants.
- Uncertain AI/ML regulatory environment — As Teradata adds AI and machine-learning capabilities to its platform, it is exposed to an emerging and evolving regulatory environment whose eventual impact on the business is, by its own account, difficult to predict.
The case for
Buyers argue that recurring revenue at 87% of the total gives the business a stable, predictable base, that switching costs slow customer losses while the cloud transition catches up, and that AI-driven demand for enterprise data platforms gives Teradata a new growth vector on top of its installed base.
The case against
Sellers fear that cloud-native competitors have already captured the growth end of the market, that Teradata's own cloud expansion is slowing rather than accelerating, and that the shrinking legacy on-premises business will keep dragging on total revenue faster than subscriptions can replace it.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
No editorial profile for this company yet
No competitor list for this company yet.
Balance Sheet & Liquidity
Revenue
$1.69B
Trailing 12 months (through 6/30/2026)
Net Income
$458M
Trailing 12 months (through 6/30/2026)
Free Cash Flow
$286M
Total Equity
$230M
Total Liabilities
$1.55B
Current Ratio
0.91
Interest Coverage
5.08
Debt/EBITDA
0.34
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$63.47
Current Price
$29.52
Margin of Safety
+53.5%
Fair Value Range
$41.26 - $85.69
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
6.06
ROE
56.5%
P/B Ratio
4.52
P/FCF
3.64
Gross Margin
60.8%
ROIC
12.3%
Profitability Radar
Value Creation (Economic Moat)
ROIC
12.3%
WACC
8.3%
ROIC − WACC
+4.1 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (18)
- ROIC 12.3%
- Gross Margin 60.8%
- P/FCF 3.64
- Operating Margin 7.5%
- Positive Free Cash Flow
- CapEx intensity
- Current Ratio
- Interest Coverage
- Debt/EBITDA
- Return on Tangible Assets
- DCF valuation (Undervalued)
- ROE 114.6%
- Earnings Surprise avg 25.8%
- PEG Ratio 1.91
- Earnings Quality (OCF/NI) 1.66
- Share Dilution -2.0%
- Net Margin Trend 27.1% vs 6.6%
- Piotroski F-Score 7/9
Failed (9)
- EPS shows upward trend
- EPS CAGR -0.17%
- Price CAGR 0.73%
- P/B Ratio 4.52
- Debt/Equity ratio
- Low reliance on intangibles
- Price below Graham Number
- Revenue Growth 5Y -2.0%
- Analyst Consensus 43% Buy
Unavailable (1)
- Dividend Payout NaN%
Piotroski F-Score
Strong financial health
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Stephen McMillan | President, CEO & Director | 54 |
| Mr. John Ederer | Chief Financial Officer | 55 |
| Mr. Charles Smotherman | Senior VP & Chief Accounting Officer | - |
| Mr. Scot Frazier Rogers J.D. | Chief Administrative Officer & Corporate Secretary | 58 |
| Mr. Richard Petley | Chief Revenue Officer | 58 |
| Mr. Sumeet Arora | Chief Product Officer | 50 |
| Mr. Michael D. Hutchinson | Chief Operating Officer | 59 |
| Mr. Louis Landry | Chief Technology Officer | - |
| Mr. Josh Fecteau | Chief Data & AI Officer and Chief Information Officer | - |
| Mr. Chad Michael Bennett | Senior Vice President of Investor Relations & Corporate Development | - |
Audit Risk
1
Board Risk
3
Compensation Risk
5
Shareholder Rights Risk
4
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2026-02-27
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-08-05
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-08-17
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for TDC, sourced from Markets Gazette.