TE Connectivity Ltd. (TEL - Free Report) has reported first-quarter fiscal 2022 adjusted earnings of $1.76 per share, which surpassed the Zacks Consensus Estimate by 8.6%. The figure rose 20% year over year.
Net sales in the reported quarter were $3.82 billion, which beat the consensus mark of $3.73 billion. The figure rose 8% from the year-ago quarter.
Top-line growth was driven by well-performing communications and industrial solutions of the company.
However, TE Connectivity witnessed a sluggish performance of its transportation solutions in the reported quarter.
Nevertheless, the company’s strong momentum across hybrid and electric vehicles, data and devices, factory automation, renewable energy, and cloud remains a major positive.
Top-Line Details
Transportation Solutions: The segment generated $2.16 billion, which accounted for 56% of net sales. The figure declined 3% year over year. This was primarily due to weak automotive production, which led to a 7% decrease in automotive sales from the year-ago quarter.
Nevertheless, the company continued benefiting from the growing proliferation of electric vehicles and strong content trends of electronification in the automotive space. Further, commercial transportation sales grew 10% year over year. Also, sensor sales grew 3% from the year-ago quarter on the back of solid momentum across transportation and industrial applications.
Industrial Solutions: The segment generated $1.06 billion, which accounted for 28% of net sales. The figure rose 21% year over year. This was driven by robust industrial equipment sales, which grew 57% from the prior-year quarter, owing to the growing capital investment in factory automation applications. Solid momentum across renewable applications led to 9% growth in energy sales. The recovery in interventional procedures led to 7% year-over-year growth in the medical category.
However, weakness in aerospace, defense and marine sales, which were down 3% year over year, was concerning.
Communications Solutions: The segment generated $601 million, which accounted for 16% of net sales. Further, the figure rose 41% year over year. This was driven by solid content growth in high-speed cloud applications, which led to a year-over-year rise of 49% in data and devices sales. Appliance sales grew 32% from the prior-year quarter, which contributed well.
Operating Details
Per management, the gross profit was $1.2 billion, which was up 7.3% year over year. As a percentage of revenues, the figure contracted 30 basis points (bps) from the year-ago quarter to 32.2%.
We note that selling, general and administrative expenses, and research and development expenses of $363 million and $175 million rose 0.5% and 8% year over year, respectively.
The company’s adjusted operating margin was 18.6% in the reported quarter, which expanded 90 bps year over year.
Balance Sheet & Cash Flow
As of Dec 24, 2021, cash and cash equivalents were $982 million, down from $1.2 billion as of Sep 24, 2021.
Long-term debt was $3.5 billion in the fiscal first quarter, down from $3.6 billion in the prior quarter.
The company generated $532 million of cash from operations in the reported quarter compared with $774 million in the previous quarter.
Further, it generated a free cash flow of $370 million.
The company returned $410 million to shareholders.
Guidance
For second-quarter fiscal 2022, TE Connectivity expects year-over-year net sales growth of 2% and 3% on a reported basis and an organic basis, respectively, to $3.7 billion. The Zacks Consensus Estimate for the same is pegged at $3.89 billion.
Adjusted earnings are projected to be $1.70 per share, reflecting growth of 8% from the year-ago quarter. The consensus mark is pegged at $1.72 per share.
Zacks Rank and Stocks to Consider
Currently, TE Connectivity carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are STMicroelectronics (STM - Free Report) , Advanced Micro Devices (AMD - Free Report) and Mimecast . While STMicroelectronics currently sports a Zacks Rank #1 (Strong Buy), Advanced Micro Devices and Mimecast carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
STMicroelectronics is scheduled to report fourth-quarter 2021 results on Jan 27. It has gained 14.6% over a year. The long-term earnings growth rate for STM is currently projected at 5%.
Advanced Micro Devices is slated to report fourth-quarter 2021 results on Feb 1. It has gained 25.1% over a year. The long-term earnings growth rate for AMD is currently projected at 46.2%.
Mimecast is slated to report third-quarter fiscal 2022 results on Feb 3. It has gained 82.3% over a year. The long-term earnings growth rate for MIME is currently projected at 35%.
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TE Connectivity Ltd. (TEL - Free Report) has reported first-quarter fiscal 2022 adjusted earnings of $1.76 per share, which surpassed the Zacks Consensus Estimate by 8.6%. The figure rose 20% year over year.
Net sales in the reported quarter were $3.82 billion, which beat the consensus mark of $3.73 billion. The figure rose 8% from the year-ago quarter.
Top-line growth was driven by well-performing communications and industrial solutions of the company.
However, TE Connectivity witnessed a sluggish performance of its transportation solutions in the reported quarter.
Nevertheless, the company’s strong momentum across hybrid and electric vehicles, data and devices, factory automation, renewable energy, and cloud remains a major positive.
Top-Line Details
Transportation Solutions: The segment generated $2.16 billion, which accounted for 56% of net sales. The figure declined 3% year over year. This was primarily due to weak automotive production, which led to a 7% decrease in automotive sales from the year-ago quarter.
Nevertheless, the company continued benefiting from the growing proliferation of electric vehicles and strong content trends of electronification in the automotive space. Further, commercial transportation sales grew 10% year over year. Also, sensor sales grew 3% from the year-ago quarter on the back of solid momentum across transportation and industrial applications.
Industrial Solutions: The segment generated $1.06 billion, which accounted for 28% of net sales. The figure rose 21% year over year. This was driven by robust industrial equipment sales, which grew 57% from the prior-year quarter, owing to the growing capital investment in factory automation applications. Solid momentum across renewable applications led to 9% growth in energy sales. The recovery in interventional procedures led to 7% year-over-year growth in the medical category.
However, weakness in aerospace, defense and marine sales, which were down 3% year over year, was concerning.
Communications Solutions: The segment generated $601 million, which accounted for 16% of net sales. Further, the figure rose 41% year over year. This was driven by solid content growth in high-speed cloud applications, which led to a year-over-year rise of 49% in data and devices sales. Appliance sales grew 32% from the prior-year quarter, which contributed well.
Operating Details
Per management, the gross profit was $1.2 billion, which was up 7.3% year over year. As a percentage of revenues, the figure contracted 30 basis points (bps) from the year-ago quarter to 32.2%.
We note that selling, general and administrative expenses, and research and development expenses of $363 million and $175 million rose 0.5% and 8% year over year, respectively.
The company’s adjusted operating margin was 18.6% in the reported quarter, which expanded 90 bps year over year.
Balance Sheet & Cash Flow
As of Dec 24, 2021, cash and cash equivalents were $982 million, down from $1.2 billion as of Sep 24, 2021.
Long-term debt was $3.5 billion in the fiscal first quarter, down from $3.6 billion in the prior quarter.
The company generated $532 million of cash from operations in the reported quarter compared with $774 million in the previous quarter.
Further, it generated a free cash flow of $370 million.
The company returned $410 million to shareholders.
Guidance
For second-quarter fiscal 2022, TE Connectivity expects year-over-year net sales growth of 2% and 3% on a reported basis and an organic basis, respectively, to $3.7 billion. The Zacks Consensus Estimate for the same is pegged at $3.89 billion.
Adjusted earnings are projected to be $1.70 per share, reflecting growth of 8% from the year-ago quarter. The consensus mark is pegged at $1.72 per share.
Zacks Rank and Stocks to Consider
Currently, TE Connectivity carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are STMicroelectronics (STM - Free Report) , Advanced Micro Devices (AMD - Free Report) and Mimecast . While STMicroelectronics currently sports a Zacks Rank #1 (Strong Buy), Advanced Micro Devices and Mimecast carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
STMicroelectronics is scheduled to report fourth-quarter 2021 results on Jan 27. It has gained 14.6% over a year. The long-term earnings growth rate for STM is currently projected at 5%.
Advanced Micro Devices is slated to report fourth-quarter 2021 results on Feb 1. It has gained 25.1% over a year. The long-term earnings growth rate for AMD is currently projected at 46.2%.
Mimecast is slated to report third-quarter fiscal 2022 results on Feb 3. It has gained 82.3% over a year. The long-term earnings growth rate for MIME is currently projected at 35%.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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