We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
TE Connectivity (TEL) Q3 Earnings Beat, Sales Fall Y/Y
Read MoreHide Full Article
TE Connectivity Ltd. (TEL - Free Report) reported third-quarter fiscal 2023 adjusted earnings of $1.77 per share, which surpassed the Zacks Consensus Estimate by 6.6%.
However, the figure decreased by 4.8% from the year-ago quarter’s reading.
Net sales in the reported quarter were $3.99 billion, which lagged the consensus mark of $4.02 billion. The figure fell 2.4% on a reported basis and 1.4% organically from the respective year-ago fiscal quarter’s readings.
Top-line decline was attributed to sluggish communication solutions.
Nevertheless, the company witnessed strong momentum in transportation solutions.
TE Connectivity Ltd. Price, Consensus and EPS Surprise
Transportation Solutions: The segment generated $2.43 billion, which accounted for 60.9% of net sales. The figure grew by 6% year over year and surpassed the Zacks Consensus Estimate of $2.38 billion. The company witnessed a 7% growth in automotive sales, driven by the growing proliferation of electric vehicles and strong content trends in electronification. Sensor sales were up 4% from the year-ago quarter, owing to solid momentum across automotive applications. Commercial transportation sales grew 1% year over year, which remained a positive.
Industrial Solutions: The segment generated $1.14 billion, which accounted for 28.5% of net sales, and came below the Zacks Consensus Estimate of $1.15 billion. The figure rose 1% year over year on improvements in commercial aerospace, which led to 8% growth in aerospace, defense and marine sales. Solid momentum across renewable applications also remained positive for the company’s energy business, which grew 11% year over year. Increasing momentum across interventional procedures led to a 10% rise in medical sales.
However, industrial equipment sales, which declined 10%, were concerning.
Communications Solutions: The segment generated $424 million, which accounted for 10.6% of net sales. Further, the figure declined by 37% year over year and missed the consensus mark of $478 million. This was attributed to broad market weakness. Data and device sales decreased by 41% and appliance sales fell 30% year over year.
Operating Details
Per management, the gross margin expanded 10 basis points (bps) from the year-ago quarter to 32.5%.
We note that selling, general and administrative expenses were $431 million, up 9.7% year over year. Research and development expenses were $176 million, down 1.7% year over year.
The company’s adjusted operating margin was 17.3% in the reported quarter, down 130 bps year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $1.1 billion, up from $905 million as of Mar 31, 2023.
Long-term debt was $3.915 billion in the fiscal third quarter compared with $3.916 billion in the prior fiscal quarter.
TE Connectivity generated $779 million in cash from operations in the reported quarter, up from $634 million in the previous quarter.
TEL generated a free cash flow of $614 million.
Guidance
For fourth-quarter fiscal 2023, TE Connectivity expects net sales of $4 billion. The Zacks Consensus Estimate for the same is pegged at $4.04 billion.
Adjusted earnings are projected at $1.75 per share. The consensus mark is pegged at $1.72 per share.
Zacks Rank & Stocks to Consider
Currently, TE Connectivity carries a Zacks Rank #3 (Hold).
Image: Bigstock
TE Connectivity (TEL) Q3 Earnings Beat, Sales Fall Y/Y
TE Connectivity Ltd. (TEL - Free Report) reported third-quarter fiscal 2023 adjusted earnings of $1.77 per share, which surpassed the Zacks Consensus Estimate by 6.6%.
However, the figure decreased by 4.8% from the year-ago quarter’s reading.
Net sales in the reported quarter were $3.99 billion, which lagged the consensus mark of $4.02 billion. The figure fell 2.4% on a reported basis and 1.4% organically from the respective year-ago fiscal quarter’s readings.
Top-line decline was attributed to sluggish communication solutions.
Nevertheless, the company witnessed strong momentum in transportation solutions.
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 $2.43 billion, which accounted for 60.9% of net sales. The figure grew by 6% year over year and surpassed the Zacks Consensus Estimate of $2.38 billion. The company witnessed a 7% growth in automotive sales, driven by the growing proliferation of electric vehicles and strong content trends in electronification. Sensor sales were up 4% from the year-ago quarter, owing to solid momentum across automotive applications. Commercial transportation sales grew 1% year over year, which remained a positive.
Industrial Solutions: The segment generated $1.14 billion, which accounted for 28.5% of net sales, and came below the Zacks Consensus Estimate of $1.15 billion. The figure rose 1% year over year on improvements in commercial aerospace, which led to 8% growth in aerospace, defense and marine sales. Solid momentum across renewable applications also remained positive for the company’s energy business, which grew 11% year over year. Increasing momentum across interventional procedures led to a 10% rise in medical sales.
However, industrial equipment sales, which declined 10%, were concerning.
Communications Solutions: The segment generated $424 million, which accounted for 10.6% of net sales. Further, the figure declined by 37% year over year and missed the consensus mark of $478 million. This was attributed to broad market weakness. Data and device sales decreased by 41% and appliance sales fell 30% year over year.
Operating Details
Per management, the gross margin expanded 10 basis points (bps) from the year-ago quarter to 32.5%.
We note that selling, general and administrative expenses were $431 million, up 9.7% year over year. Research and development expenses were $176 million, down 1.7% year over year.
The company’s adjusted operating margin was 17.3% in the reported quarter, down 130 bps year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $1.1 billion, up from $905 million as of Mar 31, 2023.
Long-term debt was $3.915 billion in the fiscal third quarter compared with $3.916 billion in the prior fiscal quarter.
TE Connectivity generated $779 million in cash from operations in the reported quarter, up from $634 million in the previous quarter.
TEL generated a free cash flow of $614 million.
Guidance
For fourth-quarter fiscal 2023, TE Connectivity expects net sales of $4 billion. The Zacks Consensus Estimate for the same is pegged at $4.04 billion.
Adjusted earnings are projected at $1.75 per share. The consensus mark is pegged at $1.72 per share.
Zacks Rank & Stocks to Consider
Currently, TE Connectivity carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , Akamai Technologies (AKAM - Free Report) and AvidXchange (AVDX - Free Report) . Salesforce sports a Zacks Rank #1 (Strong Buy), and Akamai Technologies and AvidXchange carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce shares have gained 70.7% in the year-to-date period. The long-term earnings growth rate for CRM is currently projected at 19.25%.
Akamai shares have gained 9.5% in the year-to-date period. The long-term earnings growth rate for AKAM is currently projected at 10%.
AvidXchange shares have increased 21.1% in the year-to-date period. The long-term earnings growth rate for AVDX is currently projected at 22.90%.