Why Is TE Connectivity (TEL) Down 2.6% Since Last Earnings Report?

It has been about a month since the last earnings report for TE Connectivity (TEL). Shares have lost about 2.6% in that time frame, underperforming the S&P 500.But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is TE Connectivity due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for TE Connectivity Ltd. before we dive into how investors and analysts have reacted as of late.TE Connectivity Q3 Earnings & Revenues Beat Estimates, Increase Y/YTE Connectivity reported third-quarter fiscal 2025 adjusted earnings of $2.27 per share, which increased 18.8% from the year-ago quarter and beat the Zacks Consensus Estimate by 9.13%.Net sales totaled $4.53 billion, beating the consensus estimate by 5.2%, which increased 14% reported and 9% organically year over year. Sales were favorably impacted by growth in the Industrial segment.Orders of $4.5 billion increased 6% both year over year and sequentially.TEL’s Top-Line DetailsThe Transportation solutions segment generated revenues of $2.42 billion, contributing 53.3% to net sales. The figure increased 2.8% year over year on a reported basis and 1.1% organically.Automotive sales increased 3.3% year over year, including 1.5% organic growth, supported by strong content-driven demand in Asia.Sensor sales fell 1.7% year over year, reflecting soft demand across Western end markets. Commercial transportation sales rose 3.9% year over year, driven primarily by growth in Asia and Europe.The Industrial Solutions segment generated revenues of $2.12 billion, making up 46.7% of net sales. This represented a 30% increase year over year on a reported basis and 20.5% growth organically.Digital Data Networks, Automation & Connected Living, Aerospace, Defense and Marine and Energy saw year-over-year growth of 84.2%, 10%, 8.4% and 69.9%, respectively. However, Medical experienced a decline of 13.4%.TEL’s Operating DetailsIn third-quarter fiscal 2025, GAAP gross margin expanded 50 basis points (bps) year over year to 35.3%.Selling, general and administrative expenses held flat at 10.8% of net sales, unchanged year over year.Research, development and engineering expenses, as a percentage of net sales, contracted 10 bps to 4.7%.Adjusted operating margin expanded 60 bps year over year to 19.9% in the reported quarter.TEL’s Balance Sheet & Cash FlowAs of June 27, 2025, cash and cash equivalents were $672 million, down from $2.55 billion as of March 28, 2025.Long-term debt was $4.85 billion as of June 27, 2025, compared with $3.26 billion as of March 28, 2025.TE Connectivity generated $1.2 billion in cash from operations in the reported quarter, up from the previous quarter's figure of $0.7 billion.TEL generated a free cash flow of $962 million in the third quarter, up from $424 million reported in the previous quarter.TE Connectivity Offers Positive Q4 GuidanceTE Connectivity expects fiscal fourth-quarter net sales to increase 12% year over year to $4.55 billion. Adjusted earnings are projected to be $2.27 per share, indicating growth of 16% year over year.How Have Estimates Been Moving Since Then?It turns out, estimates review have trended upward during the past month.The consensus estimate has shifted 7.14% due to these changes.VGM ScoresCurrently, 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 has a grade of C on the value side, putting it in the middle 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise TE Connectivity has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.One Big Gain, Every Trading DayTo help you take full advantage of this market, you’re invited to access every stock recommendation in all our private portfolios - for just $1.Zacks private portfolio services that closed 256 double and triple-digit winners in 2024 alone. That’s about one big gain every day the market was open. Of course, not all our picks are winners, but members have seen recent gains as high as +627% +1,340%, and +1,708%.Imagine how much you could profit with a steady stream of real-time picks from all our services that cover a number of strategies to suit a variety of investing and trading styles.See Stocks 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. 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