Key Highlights
- Third-quarter adjusted earnings per share reached $2.94, surpassing analyst projections of $2.84; revenue climbed 14% to $5.16B
- Fourth-quarter outlook exceeds Street expectations: EPS forecast at $3.05 versus consensus of $2.96, revenue projected at ~$5.25B against $5.16B estimate
- Company announces $1.4B acquisition of Astrodyne TDI, transaction anticipated to finalize by late 2026
- Year-to-date order volume surges 70%, creating substantial backlog for upcoming fiscal year
- Shares declined over 5% during premarket session despite outperforming earnings expectations
TE Connectivity (TEL) unveiled third-quarter adjusted earnings of $2.94 per share on Wednesday, exceeding the Street’s projection of $2.84. Despite the positive results, shares opened at $209.02 and experienced a decline exceeding 5% in premarket activity.
Quarterly revenue for the period concluded June 26 totaled $5.16 billion, representing a 14% year-over-year increase. Wall Street had anticipated $5 billion. The company’s industrial and transportation divisions powered this robust growth.
Looking ahead to Q4, the company projected adjusted earnings per share of $3.05, surpassing the consensus forecast of $2.96. The revenue outlook of approximately $5.25 billion similarly exceeded analyst expectations of $5.16 billion.
Chief Executive Terrence Curtin highlighted that order volumes have jumped 70% year-to-date, establishing a robust backlog as the company moves toward 2026.
Strategic Acquisition of Astrodyne TDI
Alongside its quarterly results, TE revealed plans to acquire Astrodyne TDI, a provider of power management and filtering solutions, in a $1.4 billion transaction. The company anticipates completing this acquisition by year-end 2026.
This strategic move strengthens TE’s capabilities in power management, a sector experiencing heightened demand driven by data center expansion linked to AI computing requirements.
TE manufactures electrical connector systems utilized in data center infrastructure. The surge in demand for AI-related tools has accelerated global investment in networking equipment, creating tailwinds for the business.
Navigating Tariffs and Pricing Dynamics
Curtin discussed the company’s tariff position transparently. He noted that TE has submitted applications for refunds through President Trump’s tariff initiative but hasn’t yet recovered substantial amounts.
He clarified that any refunds obtained would be passed along to customers instead of implementing widespread price reductions.
Regarding raw material expenses, Curtin indicated TE would maintain its practice of transferring increased costs to customers through pricing adjustments to safeguard profit margins. Oil-derived materials including resins continue trading at elevated levels due to escalating U.S.-Iran tensions.
The company maintains a debt-to-equity ratio of 0.42, a current ratio of 1.89, and trades within a 52-week range spanning $177.21 to $252.56.
TE announced a quarterly dividend distribution of $0.78 per share, scheduled for September 11 payment to shareholders of record as of August 21. This translates to an annualized dividend of $3.12, yielding approximately 1.5%.
From an analyst perspective, Barclays maintains a $300 price objective with an overweight recommendation. Citigroup holds a buy rating accompanied by a $230 target. The consensus price target among analysts stands at $255.31, with an overall Moderate Buy rating.
Institutional investors control 91.43% of outstanding shares. Mediolanum International Funds recently established a new stake valued at roughly $2.7 million.
Insider Shadrak W. Kroeger divested 9,400 shares on June 1 at $215.00 each, trimming his holdings by 26.57% through a predetermined 10b5-1 trading arrangement.
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