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What's in the Cards for TE Connectivity's (TEL) Q4 Earnings?

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TE Connectivity Ltd. (TEL - Free Report) is scheduled to report fourth-quarter fiscal 2022 results on Nov 2.

For the fiscal fourth quarter, TEL expects net sales of $4.2 billion, suggesting 10% and 15% growth on a reported and organic basis, respectively, from the corresponding year-ago fiscal quarter’s readings. The Zacks Consensus Estimate for the same is pegged at $4.22 billion, suggesting growth of 10.4% from the year-ago fiscal quarter’s reported figure.

TE Connectivity expects adjusted earnings of $1.85 per share, indicating a 9% rise from the year-ago fiscal quarter’s reported figure. The Zacks Consensus Estimate for the same is also pegged at $1.87 per share, indicating growth of 10.6% from the year-ago quarter’s reported figure.

TE Connectivity’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 5.8%.

Key Factors to Note

The solid execution of TE Connectivity’s strategies, especially cost-reduction and footprint-consolidation initiatives, is expected to have been the key catalysts in the fiscal fourth quarter.

TEL’s global manufacturing strategy is anticipated to have benefited its performance in the to-be-reported quarter.

Strong momentum across factory-automation applications is expected to have contributed well to TEL’s industrial equipment’s sales growth. Strength across renewable applications and ongoing digitization is likely to have driven growth in TE Connectivity’s energy business. Further, improvement in commercial aerospace is expected to have accelerated its aerospace, defense and marine sales.

All these factors are expected to have benefited the Industrial segment in the fiscal fourth quarter. The Zacks Consensus Estimate for industrial solutions sales is pegged at $1.2 billion, reflecting growth of 14.8% from the year-ago quarter’s reported figure.

Coming to the Communication segment, solid content growth in high-speed cloud applications is likely to have continued driving TEL’s data and devices sales in the to-be-reported quarter.

This, in turn, is expected to have aided the performance of the communication segment in the fiscal fourth quarter. The Zacks Consensus Estimate for communication solutions sales is pegged at $645 million, reflecting growth of 7% from the year-ago quarter’s reported figure.

The impacts of the improving Transportation segment are expected to get reflected in TE Connectivity’s results for the fiscal four quarter. The growing proliferation of autonomous features is expected to have acted as a tailwind. The increasing production of hybrid and electric vehicles is anticipated to have aided growth in the segment’s sales. Also, solid content growth and rising electronification trend are expected to have contributed well to the segment’s performance in the fiscal fourth quarter.

The Zacks Consensus Estimate for communication solutions sales is pegged at $2.4 billion, reflecting 9% growth from the year-ago quarter’s reported figure.

However, the impacts of uncertainties related to the coronavirus pandemic are expected to get reflected in TEL’s to-be-reported results. Additionally, sluggishness in the sensor and appliance business is likely to have been an overhang. Also, the weakening momentum in China might have been a headwind.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for TE Connectivity this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which isn’t the case here, as elaborated below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

TE Connectivity has an Earnings ESP of -0.54% and a Zacks Rank #3 (Hold).

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this season.

Baidu (BIDU - Free Report) has an Earnings ESP of +0.82% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baidu is set to report third-quarter 2022 results on Nov 16. The Zacks Consensus Estimate for BIDU’s earnings is pegged at $2.44 per share, suggesting an increase of 7.02% from the prior-year period’s reported figure.

The Trade Desk (TTD - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank of 2 at present.

The Trade Desk is scheduled to release third-quarter 2022 results on Nov 9. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure.

Tencent Music Entertainment Group (TME - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank of 2 at present.

Tencent Music is scheduled to release third-quarter 2022 results on Nov 15. The Zacks Consensus Estimate for TME’s earnings is pegged at 11 cents per share, suggesting an increase of 22.2% from the prior-year quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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