TE Connectivity TEL reported fourth-quarter fiscal 2024 adjusted earnings of $1.95 per share, which was in line with the Zacks Consensus Estimate and increased 9.6% year over year.

The year-over-year upside was driven by strong margin expansion.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

TEL shares were almost unchanged following the results. The stock has gained 8.7% year to date compared with the Zacks Computer and Technology sector’s rise of 27.6%.

TE Connectivity Ltd. Price, Consensus and EPS Surprise

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

Net sales were $4.07 billion that beat the consensus mark by 1.47%. The figure increased 1% on a reported basis and moved up 2% organically on a year-over-year basis.

Considering impressive fiscal fourth-quarter performance, TEL initiated a strong first-quarter fiscal 2025 guidance for revenues and earnings. 

TE Connectivity expects fiscal first-quarter net sales to increase 2% year over year to $3.9 billion 
 
Adjusted earnings are projected to be $1.88 per share, indicating growth of 2% year over year.

The strong projections are expected to help TEL stock recover in fiscal 2025.

TEL’s Top-Line Details

The Transportation solutions segment generated revenues of $2.31 billion, contributing 56.8% to net sales. The figure fell 4.2% year over year and missed the Zacks Consensus Estimate by 0.21%.

The company witnessed a 3% decline year over year in automotive sales. Organically, auto sales declined 1%.

Sensor sales were down 11% year over year. Commercial transportation sales fell 4% year over year. The reduction in sensor sales is due to a decline in industrial applications and the discontinuation of certain products.

Industrial solutions segment generated revenues of $1.18 billion, contributing 29% to net sales and beating the Zacks Consensus Estimate by 4.21%. The figure increased 2% year over year.

Industrial equipment sales declined 11% year over year, while Aerospace, defense and marine increased 14%. Energy sales increased 10% year over year, while Medical declined 2%.

The Communications solutions segment generated revenues of $577 million, contributing 14.2% to net sales. The figure increased 25% year over year and beat the consensus mark by 3.75%. 

The year-over-year surge was attributed to broad market weakness. Data and device sales increased 34%. Appliance sales were up 8% year over year.

TEL’s Operating Details

In fourth-quarter fiscal 2024, GAAP gross margin expanded 220 basis points (bps) year over year to 34%.

Selling, general and administrative expenses, as a percentage of revenues, increased 40 bps year over year to 10.6%. Research, development and engineering expenses, as a percentage of revenues, expanded 50 bps to 4.8%.

GAAP operating margin expanded 30 bps year over year to 16%. Adjusted operating margin expanded 130 bps year over year to 18.6% in the reported quarter.

TEL’s Balance Sheet & Cash Flow

As of Sept. 27, 2024, cash and cash equivalents were $1.31 billion, down from $1.46 billion as of June 28.

Long-term debt was $3.33 billion as of Sept. 27, 2024, compared with $2.95 billion as of June 28.

TE Connectivity generated $1 billion in cash from operations in the reported quarter, inline with the previous quarter.

TEL generated a free cash flow of $833 million in the fourth quarter, down from $867 million reported in the previous quarter.

In the fourth quarter of 2024, TEL’s board of directors approved a $2.5 billion increase in its share repurchase program.

Zacks Rank & Stocks to Consider

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

Shopify SHOP, Arista Networks ANET and Blackline BL are some better-ranked stocks that investors can consider in the broader sector. Each stock presently sports a Zacks Rank 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shopify shares have risen 3.2% year to date. SHOP is set to report its third-quarter 2024 results on Nov. 12.

Arista Networks shares have rallied 70.5% year to date. ANET is set to report its third-quarter 2024 results on Nov. 7.

Blackline shares have lost 8.2% year to date. BL is set to report its third-quarter 2024 results on Nov. 7.

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