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TE Connectivity (TEL) Beats Q2 Earnings Estimates, Lifts View
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TE Connectivity Ltd. (TEL - Free Report) recorded 10th consecutive earnings beat, as the company reported second-quarter fiscal 2018 adjusted earnings of $1.42 per share, beating the Zacks Consensus Estimate of $1.36. The figure also steered past the projected range of $1.33-$1.37.
The impressive earnings were driven by continued solid execution and impressive top-line growth. Encouraged by the successful execution and all-round growth, the company released upbeat earnings and revenue guidance for third-quarter fiscal 2018.
The company's shares have gained 19.6% in the past 12 months, outperforming the industry’s gain of 13.8%.
Inside the Headlines
Net sales in the quarter were up 16% year over year to $3,745 million and also topped the Zacks Consensus Estimate of $3,609 million. Solid performance in all the three segments drove the quarterly top-line growth. Excellent traction in the company’s harsh environment businesses, which have been a staple profit churner over the past few quarters, contributed significantly to the top line.
Excluding SubCom, total orders were $3.7 billion in the quarter, up 6% organically year over year. Book-to-bill ratio was 1.03.
Segmental Performance
Transportation Solutions revenues came in at $2,134 million in the reported quarter, up 21.6% on a year-over-year basis. Organic growth in automotive, commercial transportation and sensors across all regions boosted the top line.
Industrial Solutions revenues witnessed another strong quarter, rising 14% from the prior-year quarter to $972 million. The impressive growth was driven by strength in industrial equipment, Aerospace, Defense and Marine business.
Communications Solutions revenues increased 3.2% year over year to $639 million. The increase was led by strength across all regions and businesses. The segment’s sales were boosted, somewhat, by strength in Asia in Data and Devices, partially offset by weakness in Subsea communications.
The company’s adjusted gross margin in the reported quarter was 33.2%, down from the prior-year quarter. However, adjusted operating margin expanded 180 basis points from the year-ago quarter to 17%.
Liquidity & Cash Flow
TE Connectivity exited the quarter with cash and cash equivalents of $559 million, lower than $704 million reported in the prior quarter.
The company generated free cash flow of $377 million in the quarter, up from $127 million in the prior quarter.
Guidance
The company issued encouraging earnings and revenue guidance for the fiscal third quarter. It expects net sales in the range of $3.65-$3.7billion, reflecting growth of 9%. Adjusted earnings per share are projected in the band of $1.35-$1.37, reflecting growth of 10% year over year.
Additionally, for fiscal 2018, TE Connectivity raised its expectations. The company now expects net sales of $14.5-$14.7 billion, reflecting growth of 11% from the year-ago quarter at the midpoint. The company expects adjusted EPS to be within $5.52-$5.58, reflecting 15% year-over-year growth at the midpoint.
To Conclude
TE Connectivity delivered yet another impressive quarter beating both the top and bottom lines on a high note. The company’s fiscal 2018 earnings guidance and robust sales forecast are likely to go very well with investors, as it carries its growth momentum forward into fiscal 2018.
Most of the company’s operating margin expansion in the past few years has been driven by the transportation segment. Encouragingly, in the recent times we observed that both the Communications and Industrial segments are contributing significantly to the operating margin expansion as well, thus adding to the company’s strength.
Overall, we believe strong demand in end markets, along with an overarching business model, will continue to drive TE Connectivity’s future growth.
TE Connectivity Ltd. Price, Consensus and EPS Surprise
Long-term earnings per share growth rate for Internap, Etsy and Littelfuse is projected at 2%, 17.3% and 12%, respectively.
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TE Connectivity (TEL) Beats Q2 Earnings Estimates, Lifts View
TE Connectivity Ltd. (TEL - Free Report) recorded 10th consecutive earnings beat, as the company reported second-quarter fiscal 2018 adjusted earnings of $1.42 per share, beating the Zacks Consensus Estimate of $1.36. The figure also steered past the projected range of $1.33-$1.37.
The impressive earnings were driven by continued solid execution and impressive top-line growth. Encouraged by the successful execution and all-round growth, the company released upbeat earnings and revenue guidance for third-quarter fiscal 2018.
The company's shares have gained 19.6% in the past 12 months, outperforming the industry’s gain of 13.8%.
Inside the Headlines
Net sales in the quarter were up 16% year over year to $3,745 million and also topped the Zacks Consensus Estimate of $3,609 million. Solid performance in all the three segments drove the quarterly top-line growth. Excellent traction in the company’s harsh environment businesses, which have been a staple profit churner over the past few quarters, contributed significantly to the top line.
Excluding SubCom, total orders were $3.7 billion in the quarter, up 6% organically year over year. Book-to-bill ratio was 1.03.
Segmental Performance
Transportation Solutions revenues came in at $2,134 million in the reported quarter, up 21.6% on a year-over-year basis. Organic growth in automotive, commercial transportation and sensors across all regions boosted the top line.
Industrial Solutions revenues witnessed another strong quarter, rising 14% from the prior-year quarter to $972 million. The impressive growth was driven by strength in industrial equipment, Aerospace, Defense and Marine business.
Communications Solutions revenues increased 3.2% year over year to $639 million. The increase was led by strength across all regions and businesses. The segment’s sales were boosted, somewhat, by strength in Asia in Data and Devices, partially offset by weakness in Subsea communications.
The company’s adjusted gross margin in the reported quarter was 33.2%, down from the prior-year quarter. However, adjusted operating margin expanded 180 basis points from the year-ago quarter to 17%.
Liquidity & Cash Flow
TE Connectivity exited the quarter with cash and cash equivalents of $559 million, lower than $704 million reported in the prior quarter.
The company generated free cash flow of $377 million in the quarter, up from $127 million in the prior quarter.
Guidance
The company issued encouraging earnings and revenue guidance for the fiscal third quarter. It expects net sales in the range of $3.65-$3.7billion, reflecting growth of 9%. Adjusted earnings per share are projected in the band of $1.35-$1.37, reflecting growth of 10% year over year.
Additionally, for fiscal 2018, TE Connectivity raised its expectations. The company now expects net sales of $14.5-$14.7 billion, reflecting growth of 11% from the year-ago quarter at the midpoint. The company expects adjusted EPS to be within $5.52-$5.58, reflecting 15% year-over-year growth at the midpoint.
To Conclude
TE Connectivity delivered yet another impressive quarter beating both the top and bottom lines on a high note. The company’s fiscal 2018 earnings guidance and robust sales forecast are likely to go very well with investors, as it carries its growth momentum forward into fiscal 2018.
Most of the company’s operating margin expansion in the past few years has been driven by the transportation segment. Encouragingly, in the recent times we observed that both the Communications and Industrial segments are contributing significantly to the operating margin expansion as well, thus adding to the company’s strength.
Overall, we believe strong demand in end markets, along with an overarching business model, will continue to drive TE Connectivity’s future growth.
TE Connectivity Ltd. Price, Consensus and EPS Surprise
TE Connectivity Ltd. Price, Consensus and EPS Surprise | TE Connectivity Ltd. Quote
Zacks Rank and Other Stocks to Consider
TE Connectivity carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the technology sector are Internap Corporation , Etsy, Inc. (ETSY - Free Report) and Littelfuse, Inc. (LFUS - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings per share growth rate for Internap, Etsy and Littelfuse is projected at 2%, 17.3% and 12%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>