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1. Company Snapshot

1.a. Company Description

TE Connectivity Ltd., together with its subsidiaries, manufactures and sells connectivity and sensor solutions in Europe, the Middle East, Africa, the Asia–Pacific, and the Americas.The company operates through three segments: Transportation Solutions, Industrial Solutions, and Communications Solutions.The Transportation Solutions segment provides terminals and connector systems and components, sensors, relays, antennas, heat shrink tubing, and application tooling products for use in the automotive, commercial transportation, and sensor markets.


The Industrial Solutions segment offers terminals and connector systems and components; and heat shrink tubing, interventional medical components, relays, and wires and cables for aerospace, defense, oil and gas, industrial equipment, medical, and energy markets.The Communications Solutions segment supplies electronic components, such as terminals and connector systems and components, relays, heat shrink tubing, and antennas for the data and devices, and appliances markets.TE Connectivity Ltd.


sells its products to approximately 140 countries primarily through direct sales to manufacturers, as well as through third-party distributors.The company was formerly known as Tyco Electronics Ltd.and changed its name to TE Connectivity Ltd.


in March 2011.TE Connectivity Ltd.was incorporated in 2000 and is based in Schaffhausen, Switzerland.

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1.b. Last Insights on TEL

TE Connectivity's recent performance was driven by strong Q4 earnings, beating estimates, and fueled by gains in Industrial and Transportation segments. The company's solid fiscal Q4 growth was driven by rising orders and demand. Analysts boosted their forecasts after upbeat Q4 results. Institutional investors, such as Advisors Capital Management LLC and Bahl & Gaynor Inc., lifted their stakes in the company. The company's high ROE and attractive valuation also contributed to its performance. Its Q4 earnings per share was $2.44, beating the Zacks Consensus Estimate.

1.c. Company Highlights

2. TE Connectivity's Strong Q1 Earnings Driven by Industrial Solutions Growth

TE Connectivity reported a robust first quarter with sales reaching $4.7 billion, marking a 22% increase on a reported basis and 15% organically year-over-year, driven by growth in both its Industrial Solutions and Transportation Solutions segments. The company's adjusted earnings per share (EPS) was $2.72, surpassing analyst estimates of $2.54 and representing a 33% year-over-year increase. Adjusted operating margins expanded 180 basis points to 22.2%, highlighting the company's ability to maintain profitability amidst growth.

Publication Date: Jan -22

📋 Highlights
  • Q1 Sales Growth: Revenues reached $4.7 billion, up 22% reported and 15% organic YoY, driven by both segments.
  • Record Orders: Orders exceeded $5 billion, a $1 billion increase YoY, with strong production patterns across regions.
  • Earnings Momentum: Adjusted EPS hit $2.72 (+33% YoY) and operating margins expanded 180 basis points to 22.2%.
  • Industrial Solutions Surge: Segment grew 38% YoY, with digital data networks surging 70%, driven by AI and hyperscaler demand.
  • Cash Flow & Dividend Returns: Free cash flow surpassed $600 million, with 100% returned to shareholders in Q1.

Segment Performance

The Industrial Solutions segment demonstrated significant growth, increasing by 38% in the quarter, with digital data networks growing 70% year-over-year. This strong performance was a key driver of the company's overall results. The company expects continued double-digit growth in Industrial as it moves from Q1 to Q2, driven by improving trends in ACL and industrial transportation.

AI Revenue Expectations

TE Connectivity has raised its AI revenue expectations for fiscal 2026, anticipating a couple of hundred million dollars more than previously expected, driven by new program awards with hyperscalers and existing programs ramping up. This growth is expected across power, data, and signal, with the company investing in increased CapEx to support the growing pipeline of customer awards for AI programs.

Cash Generation and Return to Shareholders

The company delivered strong cash generation, with free cash flow exceeding $600 million, and returned 100% of free cash flow to shareholders in the quarter. TE Connectivity continues to expect at least 100% free cash flow conversion for fiscal '26, underscoring its commitment to returning value to shareholders.

Valuation Insights

With a P/E Ratio of 32.9 and an EV/EBITDA of 16.25, the market appears to have priced in a significant level of growth for TE Connectivity. The company's ROE of 16.5% and ROIC of 9.59% indicate a strong ability to generate returns on equity and invested capital. As the company continues to execute on its growth strategy, driven by secular trends in data and power connectivity, investors will be watching to see if TE Connectivity can meet its double-digit EPS growth goal.

3. NewsRoom

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5 Stocks With High ROE to Buy as Markets Bask in Economic Strength

Jan -29

Source: zacks.com

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New Strong Buy Stocks for January 29th

Jan -29

Source: zacks.com

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Best Income Stocks to Buy for January 29th

Jan -29

Source: zacks.com

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Core Alternative Capital Has $4.70 Million Position in TE Connectivity Ltd. $TEL

Jan -28

Source: defenseworld.net

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Here Are Tuesday’s Top Wall Street Analyst Research Calls: Affirm Holdings, Alcoa, Block, Coinbase Global,CoreWeave, Datadog, Intuitive Surgical, and More

Jan -27

Source: 247wallst.com

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Compass Wealth Management LLC Sells 24,578 Shares of TE Connectivity Ltd. $TEL

Jan -27

Source: defenseworld.net

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TE Connectivity announces pricing of $750 million senior notes offerings

Jan -26

Source: prnewswire.com

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Here is Why Growth Investors Should Buy TE Connectivity (TEL) Now

Jan -26

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.15%)

6. Segments

Transportation Solutions

Expected Growth: 7.5%

TE Connectivity's Transportation Solutions segment is poised for growth driven by increasing adoption of electric vehicles, rising demand for autonomous driving technologies, and growing need for high-speed data transmission in vehicles.

Industrial Solutions

Expected Growth: 6.3%

TE Connectivity Ltd. benefits from increasing demand for industrial automation, IoT, and renewable energy solutions, driving growth in its industrial solutions and components business.

Communications Solutions

Expected Growth: 7.4%

Growing demand for high-speed data and cloud computing is driving the communications solutions segment. Increasing adoption of 5G networks, IoT devices, and data centers is expected to fuel growth, with a focus on high-reliability and miniaturized connectors and antennas.

7. Detailed Products

Terminal and Connector

TE Connectivity's terminal and connector products are designed to connect and terminate wires and cables in a wide range of applications, including automotive, industrial, and consumer electronics.

Relays

TE Connectivity's relays are designed to switch electrical circuits on and off, and are used in a variety of applications, including automotive, industrial, and aerospace.

Fuses

TE Connectivity's fuses are designed to protect electrical circuits from overcurrent conditions, and are used in a variety of applications, including automotive, industrial, and consumer electronics.

Circuit Protection

TE Connectivity's circuit protection products are designed to protect electrical circuits from overvoltage, overcurrent, and other fault conditions, and are used in a variety of applications, including automotive, industrial, and consumer electronics.

Antennas

TE Connectivity's antennas are designed to transmit and receive radio frequency signals, and are used in a variety of applications, including wireless communication systems, automotive systems, and industrial equipment.

Sensors

TE Connectivity's sensors are designed to detect and measure physical parameters such as temperature, pressure, and position, and are used in a variety of applications, including automotive, industrial, and consumer electronics.

Connectivity and Cable Assemblies

TE Connectivity's connectivity and cable assemblies are designed to connect and transmit data, power, and signals in a variety of applications, including data centers, automotive systems, and industrial equipment.

Radar and Microwave Components

TE Connectivity's radar and microwave components are designed to transmit and receive high-frequency signals, and are used in a variety of applications, including radar systems, satellite communications, and microwave ovens.

Aerospace, Defense and Marine

TE Connectivity's aerospace, defense, and marine products are designed to meet the unique requirements of these industries, including high-reliability, high-temperature, and high-vibration applications.

Industrial and Commercial Transportation

TE Connectivity's industrial and commercial transportation products are designed to meet the unique requirements of these industries, including high-reliability, high-temperature, and high-vibration applications.

Consumer and Commercial Devices

TE Connectivity's consumer and commercial devices products are designed to meet the unique requirements of these industries, including high-reliability, high-temperature, and high-vibration applications.

8. TE Connectivity Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

TE Connectivity Ltd. operates in a niche market with high barriers to entry, reducing the threat of substitutes. However, the company's products are not entirely unique, and customers may find alternative solutions.

Bargaining Power Of Customers

TE Connectivity Ltd. has a diverse customer base, reducing the bargaining power of individual customers. The company's products are also critical components in customers' systems, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

TE Connectivity Ltd. relies on a few key suppliers for critical components. While the company has some bargaining power due to its size, suppliers may still exert some pressure on prices and delivery terms.

Threat Of New Entrants

The barriers to entry in TE Connectivity Ltd.'s markets are high, including significant capital expenditures and technological expertise. New entrants would face significant challenges in competing with the company's established products and customer relationships.

Intensity Of Rivalry

TE Connectivity Ltd. operates in a highly competitive industry with several established players. The company must continually innovate and invest in research and development to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.72%
Debt Cost 3.95%
Equity Weight 73.28%
Equity Cost 10.70%
WACC 8.90%
Leverage 36.46%

11. Quality Control: TE Connectivity Ltd. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Volatility: 9.0

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TE Connectivity

A-Score: 5.3/10

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Growth: 6.6

Quality: 6.8

Yield: 2.5

Momentum: 8.5

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A-Score: 4.6/10

Value: 0.9

Growth: 6.8

Quality: 7.7

Yield: 4.4

Momentum: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

227.13$

Current Price

227.13$

Potential

-0.00%

Expected Cash-Flows