3 Reasons TDC is Risky and 1 Stock to Buy Instead Anthony Lee Mon, October 12, 2026 at 3:35 PM EDT 3 min read TDC +0.43% ^GSPC -0.05% Trade TDC on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Teradata trades at $30.59 and has moved in lockstep with the market. Its shares have returned 17.6% over the last six months while the S&P 500 has gained 12.8%.
We don't have much confidence in Teradata. Here are three reasons why there are better opportunities than TDC, plus one stock we'd rather own.
Billings is a non-GAAP metric that is often called "cash revenue" because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Teradata's billings came in at $367 million in Q2, and over the last four quarters, its year-on-year growth averaged 3.4%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers.
While many software businesses point investors to their adjusted profits, which exclude stock-based compensation (SBC), we prefer GAAP operating margin because SBC is a legitimate expense used to attract and retain talent. This is one of the best measures of profitability because it shows how much money a company takes home after developing, marketing, and selling its products.
Analyzing the trend in its profitability, Teradata's operating margin decreased by 3.5 percentage points over the last two years. Even though its historical margin was healthy, shareholders will want to see Teradata become more profitable in the future. Its operating margin for the trailing 12 months was 7.5%.
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Over the next year, analysts predict Teradata's cash conversion will fall. Their consensus estimates imply its free cash flow margin of 43.4% for the last 12 months will decrease to 18.7%.
We see the value of companies addressing major business pain points, but in the case of Teradata, we're out. That said, the stock currently trades at 1.8× forward price-to-sales (or $30.59 per share). This valuation is reasonable, but the company's shaky fundamentals present too much downside risk. There are more exciting stocks to buy at the moment. We'd recommend looking at the most entrenched endpoint security platform on the market.
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