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Te Connectivity Ltd (TEL)
NYSE:TEL
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TE Connectivity
(NYSE:TEL)77Outperform
Positive Factors
Acquisition
The acquisition of Richards Manufacturing expands TEL’s Industrial Solutions segment with a focus in utility grid and underground energy transmission.
AI Momentum
AI momentum continuing across a broad range of hyperscalers with sales expected to exceed prior expectations.
Negative Factors
Foreign Exchange Impact
Foreign exchange headwinds are estimated to negatively impact TE Connectivity Ltd.'s revenue by approximately $415 million in FY25.
TE Connectivity (TEL) vs. S&P 500 (SPY)
Market Cap
$44.93B
Dividend Yield1.73%
Average Volume (3M)1.64M
Price to Earnings (P/E)24.0
Beta (1Y)1.23
Revenue Growth-1.09%
EPS Growth-40.55%
CountryUS
Employees87,000
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)6.26
Shares Outstanding298,353,180
10 Day Avg. Volume1,674,574
30 Day Avg. Volume1,637,046
Financial Highlights & Ratios
PEG Ratio0.20
Price to Book (P/B)N/A
Price to Sales (P/S)2.83
Price to Cash Flow (P/CF)12.80
P/FCF Ratio12.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$169.56Price Target Upside14.54% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
TE Connectivity Business Overview & Revenue Model
Company DescriptionTE Connectivity (TEL) is a global technology leader specializing in connectivity and sensor solutions. The company serves a wide array of industries, including automotive, industrial equipment, data communication systems, aerospace, defense, and energy. TE Connectivity's core products include connectors, sensors, relays, and fiber optics, which are essential components in various electronic and electrical applications, enhancing connectivity, safety, and efficiency.
How the Company Makes MoneyTE Connectivity generates revenue through the design, manufacturing, and sale of connectivity and sensor products and solutions to a diverse range of industries. The company's key revenue streams include the sale of components and systems to manufacturers in the automotive and industrial sectors, which rely heavily on high-performance connectivity solutions. Additionally, TE Connectivity earns income from the data and devices segment by providing connectivity components for data communication systems and consumer electronics. The company's strategic partnerships with leading industry players and its focus on innovation and customization contribute significantly to its earnings, enabling it to maintain a competitive edge in the connectivity and sensor market.
TE Connectivity Financial Statement Overview
Summary
TE Connectivity exhibits strong financial performance with a commendable profitability profile, a stable balance sheet, and robust cash flow generation. However, stagnant revenue growth and limited asset base expansion present challenges for future strategic objectives.Income Statement
TE Connectivity shows strong profitability with a gross profit margin of approximately 34.7% and a net profit margin of 12.1% for TTM (Trailing-Twelve-Months), indicating efficient cost management and solid earnings. However, revenue growth has been stagnant with a slight decline over the past year, which could pose challenges for future expansion.85
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.34, suggesting low leverage and financial stability. The return on equity (ROE) of 15.5% showcases efficient use of shareholder funds. The equity ratio of 55.3% indicates a robust equity base. However, the overall asset base has seen limited growth year-over-year.78
Positive
Cash Flow
Strong cash flow performance is evident with a free cash flow of $2.9 billion in TTM, demonstrating excellent liquidity. The operating cash flow to net income ratio of 1.90 indicates efficient cash generation relative to net income. However, there has been a moderate increase in capital expenditures, which might affect future free cash flow.80
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 15.85B | 15.85B | 16.03B | 16.28B | 14.92B | 12.17B | Gross Profit |
| 5.50B | 5.46B | 5.05B | 5.24B | 4.89B | 3.73B | EBIT |
| 2.95B | 2.98B | 2.30B | 2.76B | 2.43B | 1.76B | EBITDA |
| 3.72B | 3.85B | 3.14B | 3.58B | 3.48B | 1.28B | Net Income Common Stockholders |
| 1.92B | 3.19B | 1.91B | 2.43B | 2.26B | -259.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.32B | 1.32B | 1.66B | 1.09B | 1.20B | 945.00M | Total Assets |
| 22.85B | 22.85B | 21.71B | 20.78B | 21.46B | 19.24B | Total Debt |
| 4.20B | 4.20B | 4.21B | 4.21B | 4.09B | 4.15B | Net Debt |
| 2.88B | 2.88B | 2.55B | 3.12B | 2.89B | 3.20B | Total Liabilities |
| 10.37B | 10.37B | 10.06B | 9.88B | 10.71B | 9.75B | Stockholders Equity |
| 12.36B | 12.36B | 11.55B | 10.80B | 10.63B | 9.38B |
| Cash Flow | Free Cash Flow | ||||
| 2.90B | 2.80B | 2.40B | 1.70B | 1.99B | 1.43B | Operating Cash Flow |
| 3.64B | 3.48B | 3.13B | 2.47B | 2.68B | 1.99B | Investing Cash Flow |
| -1.02B | -950.00M | -768.00M | -878.00M | -1.04B | -865.00M | Financing Cash Flow |
| -2.52B | -2.87B | -1.79B | -1.68B | -1.39B | -1.10B |
TE Connectivity Technical Analysis
Negative
148.04
Price Trends
147.36
Positive
148.22
Negative
148.04
Negative
Market Momentum
1.04
Positive
45.12
Neutral
29.19
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TEL, the sentiment is Negative. The current price of 148.04 is below the 20-day moving average (MA) of 150.55, above the 50-day MA of 147.36, and below the 200-day MA of 148.04, indicating a neutral trend. The MACD of 1.04 indicates Positive momentum. The RSI at 45.12 is Neutral, neither overbought nor oversold. The STOCH value of 29.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TEL.
TE Connectivity Risk Analysis
TE Connectivity disclosed 42 risk factors in its most recent earnings report. TE Connectivity reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TE Connectivity Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $44.93B | 24.04 | 15.46% | 1.73% | -1.09% | -40.55% | |
75 Outperform | $76.36B | 32.87 | 24.75% | 0.87% | 21.25% | 24.59% | |
74 Outperform | $112.18B | 72.13 | 4.46% | 1.61% | -19.28% | -44.00% | |
70 Outperform | $177.37B | 37.50 | 28.39% | 2.74% | -10.72% | -26.60% | |
68 Neutral | $31.27B | 102.52 | 5.12% | 3.13% | -44.31% | -86.74% | |
67 Neutral | $878.27B | 151.86 | 8.71% | 1.16% | 43.99% | -62.55% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
TEL
TE Connectivity
148.04
10.18
7.38%
APH
Amphenol
63.05
8.69
15.99%
ADI
Analog Devices
226.18
39.48
21.15%
AVGO
Broadcom
187.48
54.99
41.51%
MCHP
Microchip
58.14
-25.42
-30.42%
TXN
Texas Instruments
194.84
28.85
17.38%
TE Connectivity Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: 0.24% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted record-setting operational achievements and strong cash flow, bolstered by robust AI revenue growth and industrial segment performance. However, challenges such as currency headwinds, declines in commercial transportation, and medical business posed significant concerns. The sentiment is balanced due to strong positives offset by notable negatives.Highlights
Record Operating Margin and EPS
Adjusted operating margin hit a record 19.4%, and adjusted EPS was $1.95, up 6% year-over-year, surpassing expectations.
Strong Free Cash Flow
Record first-quarter free cash flow of $674 million, up 18% year-over-year, demonstrating high earnings quality.
AI Revenue Growth
AI-related revenue is expected to exceed $600 million in fiscal 2025, doubling from the previous year.
Industrial Segment Growth
Industrial Solutions segment grew double digits, with the Digital Data Networks business growing 50% organically.
Inclusion in Dow Jones Sustainability Index
TE Connectivity was included in the Dow Jones Sustainability Index for the 13th consecutive year.
Lowlights
Currency Exchange Headwinds
Unfavorable currency exchange impacted sales by $50 million and is expected to exceed $300 million for fiscal 2025.
Decline in Commercial Transportation and Sensors
Commercial transportation was down 12% organically, and Sensors sales declined due to weakness in broader industrial markets.
Medical Business Decline
Medical business declined 25% due to inventory normalization by customers.
Uneven Auto Production
Auto production expected to decline 1% to 2% in fiscal 2025, with weakness in Europe and North America.
Company Guidance
During the first quarter earnings call for TE Connectivity's fiscal year 2025, various metrics and future guidance were discussed. The company reported first-quarter sales of $3.84 billion, which were flat year-over-year, with adjusted earnings per share (EPS) reaching $1.95, surpassing guidance and reflecting a 6% increase from the previous year. Adjusted operating margins were a record 19.4%, improving by 30 basis points annually. Orders grew to $4 billion, slightly exceeding expectations, driven by a 15% sequential increase in the Industrial Solutions segment. Free cash flow was reported as a record $674 million, up 18% from the previous year. Looking ahead, TE Connectivity anticipates second-quarter sales of $3.95 billion and adjusted EPS of around $1.96, accounting for a $0.06 headwind from currency exchange and tax impacts. The company also highlighted its inclusion in the Dow Jones Sustainability Index for the 13th consecutive year, demonstrating its commitment to sustainable business practices.TE Connectivity Corporate Events
M&A TransactionsBusiness Operations and Strategy
TE Connectivity to Acquire Richards Manufacturing for $2.3B
Positive
Feb 12, 2025
TE Connectivity announced on February 11, 2025, its definitive agreement to acquire Richards Manufacturing in a transaction valued at approximately $2.3 billion. The acquisition aims to strengthen TE’s position in the North American energy market by combining complementary product portfolios and leveraging the expertise of the Richards team. Richards Manufacturing, recognized for its leadership in utility grid products, will become a wholly owned subsidiary of TE, contributing significant sales and EBITDA margins. The transaction is expected to close in the third quarter of TE’s fiscal 2025, subject to regulatory approvals and other customary conditions.
Business Operations and StrategyFinancial Disclosures
TE Connectivity Reports Strong Q1 Results and Growth
Positive
Jan 22, 2025
On January 22, 2025, TE Connectivity announced its fiscal first quarter results, reporting net sales of $3.84 billion and an EPS of $1.95, surpassing guidance expectations. The company experienced a 6% year-over-year increase in orders, driven by its Industrial segment, and achieved record cash generation. TE Connectivity’s strategic focus on AI programs and bolt-on acquisitions, despite currency exchange challenges, underscores its commitment to growth and innovation, enhancing its market position and stakeholder value.
Business Operations and StrategyFinancial Disclosures
TE Connectivity Reorganizes Segments for 2025 Strategy
Neutral
Dec 17, 2024
TE Connectivity has reorganized its management and segments to align with its fiscal 2025 strategy, resulting in a new structure for its Transportation Solutions and Industrial Solutions segments. This reorganization involves moving businesses from the former Communications Solutions segment into the Industrial Solutions and combining certain product lines into a new automation and connected living business. The company also provided recast financial information to reflect this new segment structure, emphasizing the use of Adjusted Operating Income to offer a clearer understanding of segment performance and market conditions.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.