TE Connectivity TEL reported second-quarter fiscal 2025 adjusted earnings of $2.10 per share, which beat the Zacks Consensus Estimate by 7.14% and increased 12.9% from the year-ago quarter. 

Net sales totaled $4.1 billion, which surpassed the consensus estimate by 4.66% and increased 4% year over year. Sales were favorably impacted by growth in the Industrial segment.

Orders of $4.25 billion increased 6% both year over year and sequentially.

TEL’s Top-Line Details

The Transportation solutions segment generated revenues of $2.31 billion, contributing 55.9% to net sales. The figure declined 3.9% year over year on a reported basis and 2% organically.

The company witnessed a 2% decline year over year in automotive sales. Organically, auto sales remained flat.

Sensor sales declined 12% year over year, while commercial transportation sales dropped 7%. The decrease was primarily due to weakness in broader industrial end markets across Europe and North America.

The Industrial Solutions segment generated revenues $1.83 billion, making up 44.1% of net sales. This represented a 17% increase year over year on a reported basis and 16% organically.

Digital Data Networks, Automation & Connected Living, Aerospace, Defense and Marine, and Energysaw grew 77%, 2%, 9%, and 19% year over year, respectively. However, Medical experienced a decline of 14%.

TEL’s Operating Details

In the second quarter of fiscal 2025, GAAP gross margin expanded 90 basis points (bps) year over year to 35.2%.

Selling, general and administrative expenses, as a percentage of revenues, decreased 20 bps year over year to 11%. 

Research, development and engineering expenses, as a percentage of revenues, expanded 30 bps to 4.9%.

Adjusted operating margin expanded 60 bps year over year to 18.1% in the reported quarter.

TEL’s Balance Sheet & Cash Flow

As of March 28, 2025, cash and cash equivalents were $2.55 billion, up from $1.25 billion as of Dec. 27, 2024.

Long-term debt was $3.26 billion as of March 28, 2025, compared with $3.29 billion as of Dec. 27, 2024.

TE Connectivity generated $0.7 billion in cash from operations in the reported quarter, down from the previous quarter’s $0.9 billion.

TEL generated a free cash flow of $424 million in the second quarter, down from $674 million reported in the previous quarter.

TE Connectivity Offers Positive Q3 Guidance

TEL offered positive guidance for the third quarter of fiscal 2025, citing benefits from the Richards acquisition. TE Connectivity expects fiscal third-quarter net sales to increase 8% year over year to $4.3 billion. Adjusted earnings are projected to be $2.06 per share, indicating growth of 8% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The Zacks Consensus Estimate for third-quarter fiscal 2025 is pegged at $4.13 billion, suggesting 3.92% growth over the figure reported in the year-ago quarter. The consensus mark for earnings is pegged at 2 cents per share, down by a penny, indicating 4.71% growth from the figure reported in the year-ago quarter.

Zacks Rank & Stocks to Consider

Currently, TE Connectivity has a Zacks Rank #3 (Hold).

StoneCo STNE, Baidu BIDU and Qorvo QRVO are some better-ranked stocks that investors can consider in the broader sector. While StoneCo sports a Zacks Rank #1 (Strong Buy), Baidu and Qorvo carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

StoneCo shares have appreciated 64.6% year to date. STNE is set to report its first-quarter 2025 results on May 8.

Baidu shares are up 0.9% year to date. BIDU is slated to report its first-quarter 2025 results on May 21.

Qorvo shares have declined 15.4%, year to date. QRVO is scheduled to report its fourth-quarter fiscal 2025 results on April 29.

 

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