The Teradata Corporation (NYSE: TDC) could profit from the astronomical growth of the cloud services market.
To explain, Teradata (TDC) specializes in cloud analytics. For example, its Teradata Vantage analytics architecture can unify Analytics Platforms, Data Lakes, and Data Warehouses.
To elaborate, a Data Lake is a centralized repository that can store enormous amounts of structured and unstructured data. In addition, different analytics can run in Data Lakes. Amazon Web Services (AWS) claims data lakes outperform other storage solutions.
What is a Data Lake?
In particular, Data Lakes can support new technologies such as machine learning, and large sources of data such as log files, click stream, social media, the Internet of Things (IoT).
In contrast, a Data Warehouse is a database built for a specific purpose. Generally, data warehouses sort, clean, categorize, enrich, and manipulate data for a specific purpose. For example, a data warehouse built to store or process only customer or payment data.
Conversely, Data Lakes store enormous amounts of raw or unsorted data. For example, a company could store all the data it collects in a Data Lake. They store that data in the hope it could have future value. For instance, could hope to sell that data at some point.
The advantage of Data Lakes that you can store enormous amounts of data without special software or organization. AWS claims you can scale Data Lakes to any size. Hence, a Data Lake can enable a corporation to store and catalog all the data its e-commerce site gathers in a secure solution.
How Companies Use Data Lakes
Data scientists or artificial intelligence can search Data Lakes for data they could use or sell in the future. For example, a retailer can search its Data Lake for data it could sell to advertisers or entertainment companies.
Similarly, Disney (DIS) could build a Data Lake to store all the data its Disney+ streaming service gathers. Disney could use machine learning to search the Data Lake and identify viewers who might buy Marvel t-shirts or trips to Disneyland. Additionally, a Disney AI could identify which shows are the most addictive, so the company can produce similar programs.
Teradata Vantage allows corporations to build Data Warehouses, Data Lakes, and Analytics Platforms. The Analytics Platforms manage and analyze the data.
Data Harvesting and Big Data
One use for Teradata Vantage and Data Lakes is to identify and harvest data. Thus, Teradata is a Big Data solution and Big Data is growing.
Markets and Markets forecast the value of the Global Big Data market could grow from $138.9 billion in 2020 to $229.4 billion by 2025. Markets and Markets identifies Teradata (NYSE: TDC) as a major vendor in the global Big Data Market. In addition, Markets and Markets estimates the global Big Market is growing at a Compound Annual Growth Rate (CAGR) of 10.6%.
Similarly, Teradata is a cloud services company. Statista estimates worldwide public services cloud spending could grow from $396 billion in 2021 to $482 billion in 2022. Furthermore, public cloud services end-user spending grew from $145 billion in 2017 to $396 billion in 2021.
Thus, Teradata (TDC) is in a growing business. Both big data and cloud services are growing. Organizations are generating, storing, and harvesting more data than ever. Hence, more entities will build Data Lakes and need solutions like Teradata Venture to manage those Lakes.
Is Teradata Making Money?
The Teradata Corporation (TDC) makes money. For example, Teradata reported a quarterly operating income of $70 million and a quarterly gross profit of $313 million on 30 June 2021.
Impressively, the quarterly operating income grew from $8 million on 30 June 2020 and the quarterly gross profit grew from $256 million on 30 June 2020. Hence, Teradata is a growing company. Stockrow estimate Teradata’s revenues grew by 13.13% in the quarter ending on 31 March 2021 7.44% in the quarter ending on 30 June 2021.
The quarterly revenues grew from $457 million on 30 June 2020 to $491 million on 30 June 2021. Thus, the pandemic has been good for Teradata. Its revenues, gross profits, and operating grew for five quarters between June 2020 and June 2021.
How Much Cash does Teradata Generate?
Similarly, the quarterly operating cash flow grew from $130 million on 30 June 2020 to $225 million on 30 June 2021.
Additionally, the quarterly ending cash flow grew from $99 million on 30 June 2020 to $145 million on 30 June 2021. Plus, the quarterly ending cash flow rose to $545 million on 31 March 2021.
Impressively, Teradata paid its debts during the pandemic. It reported five quarters of negative financing cash flow between 30 June 2020 and 30 June 2021. Consequently, Teradata’s total debt fell from $542 million on 30 June 2020 to $509 million on 30 June 2021.
In comparison, Teradata’s cash and short-term investments grew from $494 million on 30 June 2020 to $684 million on 30 June 2021. Hence, Teradata (TDC) finished the first pandemic year with more cash and less debt.
What Value Does Teradata Offer?
I think Teradata (NYSE: TDC) offers both growth and some value characteristics.
For example, the total assets grew from $2.102 billion on 30 June 2020 to $2.245 billion on 31 June 2021. Similarly, the share price grew from $22.01 on 9 October 2020 to $56.63 on 13 October 2021. Thus, Terradata is a growing company with a rising share price.
In addition, I consider Teradata’s stock a value in cloud services. Comparatively, Mr. Market paid $3,247.33 for Amazon (AMZN) and $292.88 for Microsoft (MSFT) on 12 October 2021. Flexera identified AWS and Microsoft Azure as the two largest cloud services companies in April 2021.
There are some drawbacks to Teradata. In particular, Teradata pays no dividend. However, if you are seeking a cheap cloud computing and big data stock. I think Teradata deserves a look.
Originally published at https://marketmadhouse.com on October 12, 2021.
