Last Updated: 18 Sep 2024
Executive Summary
TE Connectivity Ltd (TEL) is a global technology leader in connectors and sensors, serving diverse industries including automotive, industrial, data communication, aerospace, defense, medical, oil and gas, consumer electronics, and energy. With a market capitalization of $44.3 billion, TEL offers strong fundamentals, including a robust balance sheet, healthy profitability, and consistent earnings growth. The stock is currently trading at $147.78, below its analyst target price of $172.09.
Company Overview
TEL is headquartered in Schaffhausen, Switzerland, and has operations in over 150 countries. The company designs, manufactures, and distributes a wide range of connectors, sensors, and related products, enabling critical connections and data transmission in various applications. TEL's customer base includes leading global manufacturers and service providers.
Fundamental Analysis
Revenue and Earnings: TEL has reported consistent revenue and earnings growth over the past several years. In the latest quarter, revenue remained stable year-over-year, while earnings per share (EPS) grew by 11.4%.
Profitability: TEL maintains healthy profitability metrics. Its gross profit margin is 32.0%, operating margin is 18.9%, and net profit margin is 21.9%.
Balance Sheet: The company has a strong balance sheet with $1.7 billion in cash and equivalents and $4.5 billion in total debt. Its debt-to-equity ratio is 0.46, indicating a manageable debt level.
Valuation: TEL trades at a trailing price-to-earnings (PE) ratio of 13.06, which is below its industry average. The forward PE ratio of 17.79 implies potential upside.
Technical Analysis
Trend: The stock has been trending sideways in recent months, consolidating between its 50-day and 200-day moving averages.
Support and Resistance: Key support levels include $145 and $140, while resistance levels are at $150 and $155.
Indicators: The relative strength index (RSI) is near 50, indicating neutral momentum. The moving average convergence divergence (MACD) is slightly positive, suggesting potential for further upside.
Short Term Outlook
In the short term, TEL's stock price is likely to remain range-bound, with potential for modest upside or downside movement. The company's strong fundamentals provide a solid foundation, but the current economic uncertainty could weigh on investor sentiment.
Long Term Outlook
TEL's long-term outlook remains positive. The company's exposure to growing industries, such as electric vehicles and renewable energy, provides significant growth opportunities. Its strong brand recognition, global presence, and commitment to innovation position it well for continued success.
Analyst Recommendations
Analysts have a generally bullish view on TEL. Out of 21 analysts covering the stock, 3 have a "Strong Buy" rating, 7 have a "Buy" rating, 11 have a "Hold" rating, and none have a "Sell" or "Strong Sell" rating. The consensus analyst target price is $172.09, implying a potential upside of 16.9%.
