Q1 Earnings Preview for TE Connectivity (TEL)

in EARNINGS/INVESTING IDEAS by

TE Connectivity Ltd. (NYSE:TEL) is scheduled to report Q1 earnings results before markets open for trading on January 29, 2020.

The company is expected to report earnings of $1.14/share on revenue of $3.111 billion. The consensus earnings per share (EPS) of $1.14/share is based on a poll of 16 analysts and represents a decline of -11.9% over the same quarter last year when the company reported earnings of $1.29/share.

The revenue forecast of $3.111 billion based on a poll of 14 analysts implies a year-over-year (YoY) decline of -7.0%. Last year the company reported $3.347 billion in revenue for the quarter.

Expected to report EPS decline of -$0.15/share for Q1, 2019
Metric Expected Prior Year YoY Change
Revenue $3,111.43 $3,347.00 -7.0%
EPS $1.14 $1.29 -11.9%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from TE Connectivity for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2019 $1.31 $1.33 1.8% Beat
Q3, 2019 $1.43 $1.50 4.9% Beat
Q2, 2019 $1.27 $1.42 11.8% Beat
Q1, 2019 $1.28 $1.29 0.8% Beat
Q4, 2018 $1.32 $1.38 4.5% Beat
Q3, 2018 $1.36 $1.43 5.0% Beat
Q2, 2018 $1.35 $1.42 4.9% Beat
Q1, 2018 $1.25 $1.40 12.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 27, 2019, the stock price reacted by falling by -5.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-30 $94.43 $89.50 -5.2% Decline
2019-07-24 $91.20 $91.95 0.8% Increase
2019-04-24 $89.81 $95.51 6.3% Increase
2019-01-23 $79.48 $78.76 -0.9% Decline

Fundamentals And Technical Analysis

TE Connectivity is currently trading at $100.42/share, up 0.2% for the day. The company is trading at approximately 99.6% of its 52-week high of $100.78/share. The company’s stock price is up 12.2% since the last earnings report and up 0.1% over the previous week.

NYSE:TEL Stock Price Chart Source: Finbox

The company’s 14 Day Relative Price Index (RSI) of 70.83 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 17.2x and a forward P/E multiple of 19.4x. TE Connectivity’s current share price also implies a price-to-book (P/B) multiple of 3.2x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q4
Period End Date September 27, 2019
Stock Price (Current) $100.42
P/E Ratio 17.2x
P/E Ratio (Fwd) 19.4x
PEG Ratio 1.8
Total Debt to Capital (%) 10.6%
Levered Free Cash Flow $1.673 billion
Enterprise Value / EBITDA 12.4x

Source: Finbox

Company Profile: TE Connectivity Ltd.

TE Connectivity Ltd. is a large-cap stock with a market capitalization of $33.493 billion and a total enterprise value of $36.531 billion. The company operates in the Information Technology sector and the Electronic Equipment, Instruments & Components industry.

TE Connectivity manufactures and sells connectivity and sensors solutions in Europe, the Middle East, Africa, the Asia–Pacific, and the Americas. The company operates through three segments: Transportation Solutions, Industrial Solutions, and Communications Solutions.

The Transportation Solutions segment provides terminals and connector systems and components, sensors, antennas, relays, application tooling, wires, and heat shrink tubing products for use in the automotive, commercial transportation, and sensor markets.

The Industrial Solutions segment offers terminals and connector systems and components; heat shrink tubing; relays; and wires and cables for industrial equipment, aerospace, defense, oil and gas, and energy markets.

The Communications Solutions segment supplies electronic components, such as terminals and connector systems and components, relays, heat shrink tubing, and antennas for the data and devices, and appliances markets. TE Connectivity Ltd. sells its products to approximately 140 countries primarily through direct selling to manufacturers, as well as through third-party distributors.

The company was formerly known as Tyco Electronics Ltd. and changed its name to TE Connectivity Ltd. in March 2011. TE Connectivity Ltd. was incorporated in 2000 and is based in Schaffhausen, Switzerland.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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