Why Is TE Connectivity (TEL) Down 0.8% Since Last Earnings Report?

A month has gone by since the last earnings report for TE Connectivity (TEL). Shares have lost about 0.8% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is TE Connectivity due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. TEL Q1 Earnings Surpass Estimates, Sales Increase Y/YTE Connectivity reported first-quarter fiscal 2025 adjusted earnings of $1.95 per share, which increased 6% from the year-ago quarter and beat the Zacks Consensus Estimate by 3.17%.Net sales totaled $3.84 billion, missing the consensus estimate by 1.92%. The metric was unchanged year over year. Sales were unfavorably impacted by heightened currency exchange headwinds in the reported quarter.TEL has offered conservative guidance for the second quarter of fiscal 2025, citing foreign exchange pressures affecting sales, and a combination of forex and tax headwinds impacting earnings.TE Connectivity expects fiscal second-quarter net sales to decrease 0.5% year over year to $3.95 billion. Adjusted earnings are projected to be $1.96 per share, indicating year-over-year growth of 5%.The company also expects sequential organic growth for both Transportation and Industrial Solutions segments.TEL’s Top-Line DetailsThe Transportation Solutions segment generated revenues of $2.24 billion, contributing 58.5% to net sales. This figure declined 6.3% year over year on a reported basis and dropped 5% organically.The company witnessed a 4% year-over-year dip in automotive sales. Organically, auto sales edge down 3%.Sensor sales declined 13% year over year, while commercial transportation sales dropped 12%. The decrease was primarily driven by weakness in broader industrial end markets across Europe and North America.The Industrial Solutions segment generated revenues of $1.59 billion, making up 41.5% of net sales. This represented an 11% year-over-year increase on a reported basis and 9% growth organically.The Industrial Solutions segment includes Digital Data Networks; Automation & Connected Living; Aerospace, Defense and Marine; and Energy, which saw year-over-year growth of 48%, 3%, 15% and 5%, respectively. However, Medical, which also falls under the segment, experienced a decline of 25%.TEL’s Operating DetailsIn first-quarter fiscal 2025, the GAAP gross margin expanded 90 basis points (bps) year over year to 35.5%.Selling, general and administrative expenses, as a percentage of revenues, increased 10 bps year over year to 11.1%. Research, development and engineering expenses, as a percentage of revenues, expanded 40 bps to 4.9%.The adjusted operating margin expanded 30 bps year over year to 19.4% in the reported quarter.TEL’s Balance Sheet & Cash FlowAs of Dec. 27, 2024, cash and cash equivalents were $1.25 billion, down from $1.32 billion as of Sept. 27, 2024.The long-term debt was $3.29 billion as of Sept. 27, 2024, compared with $3.33 billion as of Sept. 27, 2024.TE Connectivity generated $0.9 billion in cash from operations in the reported quarter, down from the previous quarter’s $1 billion.TEL generated a free cash flow of $674 million in the fiscal first quarter, down from $833 million in the previous quarter.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.VGM ScoresAt this time, TE Connectivity has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, TE Connectivity has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TE Connectivity Ltd. (TEL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks