TE Connectivity Reports Mixed Q3 Results, Raises Outlook on AI-Driven Demand

TE Connectivity reports mixed Q3 results; initiates Q4 of FY24 outlook

TE Connectivity press release (NYSE:TEL): Q3 Non-GAAP EPS of $1.91 beats by $0.05. Revenue of $3.98B (-0.3% Y/Y) misses by $30M. Orders were $4.1 billion, up 4% year over year and 3% sequentially, driven by momentum in artificial intelligence programs. Cash from operating activities of $2.4 billion, up 22% year over year. Free cash flow of approximately $2.0 billion, up 36% year over year. Fourth Quarter FY24 Outlook:For the fourth quarter of fiscal 2024, the company expects net sales of approximately $4.0 billion vs. $4.12B consensus. GAAP EPS from continuing operations is expected to be approximately $1.80, up 3% year over year, with adjusted EPS of approximately $1.94, up 9% year over year vs. $1.93 consensus. Fourth quarter guidance includes a $0.10 year-over-year headwind from tax and currency exchange rates. More on TE Connectivity TE Connectivity: Strengthening Fundamentals, Higher Multiples Justify Re-Rating (Rating Upgrade) TE Connectivity: Secular Trends Underlying Its Sustainable Growth TE Connectivity Q3 2024 Earnings Preview Seeking Alpha's Quant Rating on TE Connectivity Historical earnings data for TE Connectivity

TE Connectivity posts mixed Q3 results amid market headwinds By Investing.com

SCHAFFHAUSEN, Switzerland - TE Connectivity Ltd. (NYSE: NYSE:TEL), a global industrial technology leader, reported its fiscal third-quarter results, surpassing earnings expectations while meeting revenue guidance despite facing a challenging market environment. The company reported adjusted earnings per share (EPS) of $1.91, which was $0.05 higher than the analyst consensus of $1.86. Revenue for the quarter was in line with guidance at $3.98 billion, slightly below the consensus estimate of $4.02 billion. The company's stock saw a modest increase of +0.7% following the announcement, indicating a positive but restrained investor response to the earnings beat. TE Connectivity's results were achieved against a backdrop of margin expansion and record cash flow generation, despite a 1% decline in reported revenue YoY. CEO Terrence Curtin highlighted the company's operational performance, stating, "I'm pleased that our team continued to navigate a dynamic market environment to deliver another strong quarter of performance, highlighted by operating margin expansion of 200 basis points, delivering EPS above guidance and record cash flow generation." Curtin also noted the growth in the automotive business and significant sales growth in the Communications segment, driven by momentum in artificial intelligence programs. Looking ahead to the fourth quarter of fiscal 2024, TE Connectivity anticipates adjusted EPS of approximately $1.94, which is slightly above the analyst consensus of $1.93. The company expects revenue to be around $4 billion, falling short of the consensus estimate of $4.11 billion. The guidance includes a $0.10 headwind from tax and currency exchange rates.

TE Connectivity share maintains perform rating amid Q3 results By Investing.com

On Wednesday, TE Connectivity (NYSE:TEL), a global industrial technology company, maintained its Perform rating according to Oppenheimer, following the company's fiscal third-quarter earnings report. TE Connectivity reported an adjusted earnings per share (EPS) of $1.91, which is an 8% increase year-over-year and slightly above the $1.86 estimate and the company's own $1.85 guidance. This increase came despite a negative impact of $(0.18) from foreign exchange and tax rates, versus the $(0.15) expected. Sales for the quarter reached $3.98 billion, a slight decline of 0.5% year-over-year but consistent with expectations and the company's guidance of approximately $4.0 billion. The sales figure also represented a 2% organic growth, aligning with the forecast. Adjusted operating margin (OM) was reported at 19.3%, a substantial 200 basis points improvement compared to the estimated 18.5%. Adjusted operating profit (OP) was $766 million, an 11% increase from the previous year, surpassing the $740 million estimate. The book-to-bill ratio, which measures order backlog against billed sales, was 1.04 times, indicating more orders were received than billed during the quarter. This is an increase from the 0.99 times ratio during the same quarter of the previous fiscal year. Notably, the Communications segment saw a significant rise in orders, with a 96% year-over-year increase, reaching a book-to-bill ratio of 1.55. The Transportation and Industrial segments recorded ratios of 0.94 and 1.01, respectively. Looking ahead to the fiscal fourth quarter of 2024, TE Connectivity forecasts sales of approximately $4.0 billion, indicating a slight decline of 1% but with an expected 1% organic growth. This is slightly below the analyst's projection of $4.14 billion and the $4.11 billion consensus. The company also anticipates an adjusted EPS of around $1.94, compared to the $1.99 estimate and the $1.93 consensus. Year-to-date free cash flow (FCF) was robust at $1.98 billion, with $867 million generated in the third quarter alone, positioning the company well against its guidance of greater than 100% free cash flow to adjusted net income and compared to the full-year estimate of $2.41 billion. In other recent news, TE Connectivity has been the focus of multiple analyst updates. JPMorgan (NYSE:JPM) raised the company's stock target to $180.00 while maintaining a Neutral rating, attributing the adjustment to factors including a declining auto production outlook and a stagnant industrial outlook. The firm also highlighted potential growth in TE Connectivity's Communication Solutions segment. Similarly, Jefferies increased its price target for TE Connectivity to $190.00, anticipating strong third-quarter earnings influenced by adjustments in global automotive forecasts and expected recovery in the demand for Industrial Equipment. BofA Securities also raised its price target for TE Connectivity to $170, citing the company's ability to grow its content per vehicle and maintain overall growth. The firm anticipates the company to report revenues of $4.0 billion and earnings per share of $1.85 for the fiscal third quarter. On the other hand, Baird adjusted its price target down to $162, anticipating a quarter similar to the previous one, where TE Connectivity met expectations but issued lower forward guidance. Lastly, Evercore ISI maintained an Outperform rating, suggesting that divesting TE Connectivity's medical business could benefit the company strategically. The firm later increased its price target to $175, citing growth prospects in AI and EV markets. These are the recent developments for TE Connectivity.

TE Connectivity announces third quarter results for fiscal year 2024

Delivered EPS above guidance driven by strong margin expansion; Record year-to-date cash flow "I'm pleased that our team continued to navigate a dynamic market environment to deliver another strong quarter of performance, highlighted by operating margin expansion of 200 basis points, delivering EPS above guidance and record cash flow generation," said TE Connectivity CEO Terrence Curtin. "In our Transportation Segment, our automotive business grew 4% organically despite a decline in auto production, and three out of four businesses in our Industrial segment continued their growth trajectories. In our Communications segment, we achieved sales growth of more than 20% along with record orders, driven by momentum in artificial intelligence programs where we are well positioned with multiple customers. We expect to deliver year-over-year earnings growth and margin expansion in the fourth quarter as well as double-digit earnings growth for the full year. As we look to the future, we continue to invest in key long-term growth trends to innovate alongside our valued customers around the world." Fourth Quarter FY24 Outlook For the fourth quarter of fiscal 2024, the company expects net sales of approximately $4.0 billion. GAAP EPS from continuing operations is expected to be approximately $1.80, up 3% year over year, with adjusted EPS of approximately $1.94, up 9% year over year. Fourth quarter guidance includes a $0.10 year-over-year headwind from tax and currency exchange rates. Information about TE Connectivity's use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables. Conference Call and Webcast The company will hold a conference call for investors today beginning at 8:30 a.m. ET. The conference call may be accessed in the following ways: About TE Connectivity TE Connectivity Ltd. (NYSE: TEL) is a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions enable the distribution of power, signal and data to advance next-generation transportation, renewable energy, automated factories, data centers, medical technology and more. With more than 85,000 employees, including 8,000 engineers, working alongside customers in approximately 140 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn, Facebook, WeChat, Instagram and X (formerly Twitter). Non-GAAP Financial Measures We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies. The following provides additional information regarding our non-GAAP financial measures: Forward-Looking Statements This release contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results. In addition, our proposed change of incorporation from Switzerland to Ireland is subject to risks, such as the risk that the change of place of incorporation might not be completed or, if completed, that the anticipated advantages might not materialize, as well as the risks that the price of our stock could decline and our position on stock exchanges and indices could change, and Irish corporate governance and regulatory schemes could prove different or more challenging than currently expected. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, the extent, severity and duration of business interruptions, such as the coronavirus disease 2019 ("COVID-19") negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate, including continuing military conflict in certain parts of the world; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. More detailed information about these and other factors is set forth in TE Connectivity Ltd.'s Annual Report on Form 10-K for the fiscal year ended Sept 29, 2023, as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

TE Connectivity target raised to $156 on AI-driven results By Investing.com

On Wednesday, Truist Securities adjusted its outlook on TE Connectivity (NYSE:TEL), a company specializing in connectivity and sensor solutions, by increasing its price target to $156 from the previous $151. The firm sustained its Hold rating on the stock. The revision follows the company's second-quarter results, which presented a mix of achievements and shortfalls. TE Connectivity reported revenues that slightly missed expectations in the transportation and industrial sectors; however, it surpassed margin projections. The performance of the company's Communications segment, particularly in data centers and artificial intelligence (AI) markets, was highlighted as the primary contributor to the positive results and bookings. Despite the earnings per share (EPS) outperforming estimates, Truist Securities remains cautious, expressing a preference for other investments within the connectors and automotive end markets. TE Connectivity's calendar year 2025 EPS forecast has been modestly increased to $8.43, up from $8.38. This adjustment is attributed to the anticipated benefits from the company's restructuring efforts. The new price target is based on a 18.5 times earnings multiple, which represents a 1.5 times discount compared to the 20 times earnings multiple of its industry peers. The firm's analysis reflects a recognition of TE Connectivity's recent successes, particularly in the communications sector driven by AI, while also accounting for the broader challenges faced by the company. The updated price target and EPS forecast provide investors with the latest expectations from Truist Securities regarding TE Connectivity's financial trajectory. In other recent news, TE Connectivity Ltd (NYSE:TEL). reported a robust third-quarter performance for the fiscal year 2024. The connectivity and sensor solutions leader saw its sales reach the $4 billion mark, signifying a 2% organic growth year-over-year. The adjusted earnings per share (EPS) climbed to $1.91, marking an 8% increase from the previous year. In addition, the company generated a record $2 billion in free cash flow over the first three quarters. TE Connectivity's growth was driven by various segments, including the auto business in the transportation sector and AI applications in the communications segment. The company also mentioned its potential interest in future mergers and acquisitions that align with its markets and technologies. Looking ahead, TE Connectivity expects a 9% rise in adjusted EPS for the fourth quarter and projects double-digit earnings growth for the full fiscal year. Despite some declines in the Industrial Equipment business and certain regional markets, the company remains optimistic about its growth prospects. Following Truist Securities' updated outlook on TE Connectivity, current metrics from InvestingPro reveal a company that is trading at a favorable valuation with a P/E ratio of 14.23, indicating potential for investors looking for reasonable entry points in terms of near-term earnings growth. The company's commitment to shareholder returns is also evident, with a dividend yield of 1.72% and a notable track record of raising its dividend for 14 consecutive years. This stability is further underscored by TE Connectivity's low price volatility and its solid position as a prominent player in the Electronic Equipment, Instruments & Components industry. InvestingPro Tips suggest that TE Connectivity operates with a moderate level of debt and has cash flows that can sufficiently cover interest payments, which may appeal to risk-averse investors. Additionally, the company is trading near its 52-week high, with the price at 98.12% of this peak, reflecting positive market sentiment. For those interested in further analysis, there are additional tips available on InvestingPro, which can be accessed with the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. The insights provided by InvestingPro, including a fair value estimate of $151.25 and a forthcoming earnings date on July 24, 2024, offer valuable context to investors considering TE Connectivity's stock. With analysts predicting profitability this year and a solid performance over the last twelve months, the company's financial health appears robust. For a deeper dive into TE Connectivity's performance and future prospects, readers can explore the additional 9 InvestingPro Tips available for the company.

TE Connectivity (TEL) Q3 Earnings Top Estimates, Sales Fall Y/Y

TE Connectivity Ltd. TEL reported third-quarter fiscal 2024 adjusted earnings of $1.91 per share, which surpassed the Zacks Consensus Estimate by 2.69% and increased 8% year over year. The year-over-year upside was driven by strong margin expansion. Net sales in the reported quarter were $3.97 billion, missing the consensus mark by 0.51%. The figure dropped 1% on a reported basis but moved up 2% organically on a year-over-year basis. Orders were $4.1 billion in the reported quarter, up 4% year over year and 3% sequentially, driven by strong momentum in artificial intelligence programs. TE Connectivity Ltd. Price, Consensus and EPS Surprise TE Connectivity Ltd. price-consensus-eps-surprise-chart | TE Connectivity Ltd. Quote The Transportation solutions segment generated revenues of $2.33 billion, which contributed 58.6% to net sales. The figure fell 4.2% year over year and missed the Zacks Consensus Estimate by 2.94%. The company witnessed a 1% decline in automotive sales. Organically, auto sales increased 4%. Sensor sales were down 15% year over year. Commercial transportation sales fell 10% year over year. TEL's initiatives to exit lower-margin and lower-growth products negatively impacted sensor sales, along with weakness in industrial markets. Industrial solutions segment generated revenues of $1.13 billion, contributing 28.5% to net sales and missing the Zacks Consensus Estimate by 1.24%. The figure dropped 0.7% year over year. Industrial equipment sales declined 17% year over year, while Aerospace, defense and marine increased 18%. Energy sales declined 2% year over year, while Medical increased 7%. The Communications solutions segment generated revenues of $516 million, contributing 13% to net sales. The figure increased 21.7% year over year and beat the consensus mark by 11.85%. Data and device sales increased 31%. Appliance sales were up 9% year over year. Operating Details In third-quarter fiscal 2024, GAAP gross margin expanded 230 basis points (bps) year over year to 34.8%. Selling, general and administrative expenses, as a percentage of revenues, increased 10 bps year over year to 10.8%. Research, development and engineering expenses, as a percentage of revenues, expanded 30 bps to 4.7%. GAAP operating margin expanded 320 bps year over year to 19%. Adjusted operating margin expanded 200 bps year over year to 19.3% in the reported quarter. Balance Sheet & Cash Flow As of Jun 28, 2024, cash and cash equivalents were $1.46 billion, down from $1.18 billion as of Mar 29, 2024. Long-term debt was $2.95 billion as of Jun 28, 2024, compared with $2.96 billion as of Mar 29, 2024. TE Connectivity generated $1 billion in cash from operations in the reported quarter, up from $710 million in the previous quarter. TEL generated a free cash flow of $867 million in the reported quarter, up from $543 million reported in the previous quarter. Guidance For fourth-quarter fiscal 2024, TE Connectivity expects net sales of $4 billion with year-over-year organic growth, driven by the Transportation and Communications segments. Adjusted earnings are projected at $1.94 per share, indicating growth of 9% year over year. Zacks Rank & Stocks to Consider Currently, TE Connectivity has a Zacks Rank #3 (Hold). The stock has gained 7.8% compared with the Zacks Computer and Technology sector's rise of 23.8% year to date. Arista Networks ANET, Apple AAPL and Cognizant Technology Solutions CTSH are some better-ranked stocks that investors can consider in the broader sector. Arista Network sports a Zacks Rank #1 (Strong Buy) at present, while Apple and Cognizant Technology Solutions carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here. Arista Networks' shares have gained 45.4% year to date. ANET is set to report its second-quarter 2024 results on Jul 30. Apple shares have gained 16.3% year to date. AAPL is set to report its third-quarter fiscal 2024 results on Aug 1. Cognizant Technology Solutions' shares have dropped 0.5% year to date. CTSH is set to report its second-quarter 2024 results on Jul 31. Buy 5 Stocks BEFORE Election Day Biden or Trump? Zacks is releasing a FREE Special Report, Profit from the 2024 Presidential Election (no matter who wins). Since 1950, presidential election years have been strong for the market. This report names 5 timely stocks to ride the wave of electoral excitement. They include a medical manufacturer that gained +11,000% in the last 15 years... a rental company absolutely crushing its sector... an energy powerhouse planning to grow its already large dividend by 25%... an aerospace and defense standout that just landed a potentially $80 billion contract... and a giant chipmaker building huge plants in the U.S. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL) : Free Stock Analysis Report Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report TE Connectivity Ltd. (TEL) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.