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What's in the Cards for TE Connectivity (TEL) in Q2 Earnings?

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TE Connectivity Ltd. (TEL - Free Report) is scheduled to report second-quarter fiscal 2023 results on Apr 26.

For the fiscal second quarter, TEL expects net sales of $3.9 billion, with 3% decline on a reported basis and 2% growth on an organic basis from the year-ago fiscal quarter’s reading. The Zacks Consensus Estimate is pegged at $3.9 billion, suggesting a decline of 2.6% from the year-ago fiscal quarter’s reported figure.

TE Connectivity expects adjusted earnings of $1.57 per share. The Zacks Consensus Estimate is also pegged at $1.57, indicating a fall of 13.3% from the year-ago quarter’s reported figure.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 3.67%.

TE Connectivity Ltd. Price and EPS Surprise

 

TE Connectivity Ltd. Price and EPS Surprise

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

 

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 second 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 the company’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 quarter under review. The Zacks Consensus Estimate for industrial solutions sales is pegged at $1.12 billion, implying growth of 3% from the year-ago quarter’s reported figure.

The growing proliferation of autonomous features is expected to have acted as a tailwind for the Transportation segment. 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.

However, sluggishness in sensor and commercial transportation businesses is expected to have impacted the segment negatively. Also, weakening momentum in China might have been a concern.

The Zacks Consensus Estimate for Transportation segment sales is pegged at $1.8 billion, suggesting a 23.2% decline 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 quarter to be reported.

However, broad market weakness is expected to have been a major headwind for the segment. The Zacks Consensus Estimate for Communication segment sales is pegged at $495 million, indicating a decline of 19.9% from the year-ago quarter’s reported figure.

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. 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 +0.46% and a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies worth considering from the same space, as our model shows that these have the right combination of elements to beat on earnings in their soon-to-be-reported quarterly results.

Block (SQ - Free Report) has an Earnings ESP of +5.22% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Block is set to report first-quarter 2023 results on May 4. The Zacks Consensus Estimate for SQ’s earnings is pegged at 31 cents per share, suggesting an increase of 72.2% from the prior-year quarter’s reported figure.

Bruker (BRKR - Free Report) has an Earnings ESP of +1.21% and a Zacks Rank of 3 at present.

Bruker is scheduled to release first-quarter 2023 results on May 3. The Zacks Consensus Estimate for BRKR’s earnings is pegged at 55 cents per share, indicating a rise of 12.2% from the prior-year quarter’s reported figure.

Perficient (PRFT - Free Report) currently has an Earnings ESP of +0.39% and is Zacks #3 Ranked.

Perficient is expected to release first-quarter 2023 results on May 2. The Zacks Consensus Estimate for PRFT’s earnings is pegged at $1.04 per share, implying an improvement of 6.1% from the prior-year quarter’s reported figure.

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

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