Back to top

Image: Bigstock

TE Connectivity (TEL) Q4 Earnings & Sales Beat, Rise Y/Y

Read MoreHide Full Article

TE Connectivity Ltd. (TEL - Free Report) has reported fourth-quarter fiscal 2021 adjusted earnings of $1.69 per share, which surpassed the Zacks Consensus Estimate by 2.4%. The figure rose 46% year over year.

Net sales in the reported quarter were $3.818 billion, which beat the consensus mark of $3.811 billion. The figure rose 17% from the year-ago quarter.

Top-line growth was driven by well-performing transportation, communications and industrial solutions of the company.

However, TE Connectivity witnessed the pandemic-induced supply-chain constraints, which were acting as headwinds.

Nevertheless, the company’s strong momentum across hybrid and electric vehicles, data and devices, factory automation, and cloud remains a major positive.

TE Connectivity Ltd. Price, Consensus and EPS Surprise

TE Connectivity Ltd. Price, Consensus and EPS Surprise

TE Connectivity Ltd. price-consensus-eps-surprise-chart | TE Connectivity Ltd. Quote

Top-Line Details

Transportation Solutions: The segment generated $2.2 billion, which accounted for 57.6% of net sales. The figure rose 18% year over year. This can be attributed to the growing proliferation of electric vehicles and strong content trends of electronification, which led to a 14% year-over-year rise in the company’s automotive sales.

Commercial transportation sales grew 40% year over year. Sensor sales grew 16% from the year-ago quarter on the back of solid momentum across transportation applications.

Industrial Solutions: The segment generated $1.02 billion, which accounted for 26.6% of net sales. The figure rose 6% year over year. This was driven by robust industrial equipment sales, which grew 33% from the prior-year quarter, owing to the growing capital investment in factory automation applications.

Solid momentum across renewable applications led to 3% growth in energy sales. Recovery in interventional procedures led to 5% year-over-year growth in the medical category.

However, weakness in the commercial aerospace market remained a headwind.

Communications Solutions: The segment generated $603 million, which accounted for 15.8% of net sales. Further, the figure rose 38% year over year. This was driven by solid content growth from cloud applications, which led to a year-over-year rise of 37% in data and devices sales. Appliance sales grew 39% from the prior-year quarter, which contributed well.

Operating Details

Per management, the gross profit was $1.3 billion, which was up 30.3% year over year. As a percentage of revenues, the figure expanded 340 basis points (bps) from the year-ago quarter to 33.1%.

We note that selling, general and administrative expenses, and research and development expenses of $384 million and $173 million rose 9.1% and 16.9% year over year, respectively.

The company’s adjusted operating margin was 18.5% in the reported quarter, which expanded 400 bps year over year.

Balance Sheet & Cash Flow

As of Sep 24, 2021, cash and cash equivalents were $1.2 billion, down from $1.4 billion as of Jun 25, 2021.

Long-term debt was $3.59 billion in the fiscal fourth quarter, down from $3.63 billion in the prior quarter.

The company generated $774 million of cash from operations in the reported quarter compared with $682 million in the previous quarter.

Further, it generated a free cash flow of $536 million.

Guidance

For first-quarter fiscal 2022, TE Connectivity expects net sales growth of 5% and 4% year over year on a reported basis and an organic basis, respectively, to $3.7 billion. The Zacks Consensus Estimate for the same is pegged at $3.8 billion.
    
Adjusted earnings are projected to be $1.60 per share, reflecting growth of 9% from the year-ago quarter. The consensus mark is pegged at $1.64 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 Lam Research (LRCX - Free Report) , Coupa Software, Inc. and Trimble Inc. (TRMB - Free Report) . All three companies currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
    
The long-term earnings growth rates of Lam Research, Coupa Software and Trimble are pegged at 17.01%, 24.28% and 10%, respectively.


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


Lam Research Corporation (LRCX) - $25 value - yours FREE >>

Trimble Inc. (TRMB) - $25 value - yours FREE >>

TE Connectivity Ltd. (TEL) - $25 value - yours FREE >>

Published in