Yahoo Finance TE Connectivity (TEL) Q4 Earnings & Sales Beat, Rise Y/Y
TE Connectivity Ltd. TEL has reported fourth-quarter fiscal 2021 adjusted earnings of $1.69 per share, which surpassed the Zacks Consensus Estimate by 2.4%. The figure rose 46% year over year.
Net sales in the reported quarter were $3.818 billion, which beat the consensus mark of $3.811 billion. The figure rose 17% from the year-ago quarter.
Top-line growth was driven by well-performing transportation, communications and industrial solutions of the company.
However, TE Connectivity witnessed the pandemic-induced supply-chain constraints, which were acting as headwinds.
Nevertheless, the company’s strong momentum across hybrid and electric vehicles, data and devices, factory automation, and cloud remains a major positive.
TE Connectivity Ltd. Price, Consensus and EPS Surprise
TE Connectivity Ltd. price-consensus-eps-surprise-chart | TE Connectivity Ltd. Quote
Top-Line Details
Transportation Solutions: The segment generated $2.2 billion, which accounted for 57.6% of net sales. The figure rose 18% year over year. This can be attributed to the growing proliferation of electric vehicles and strong content trends of electronification, which led to a 14% year-over-year rise in the company’s automotive sales.
Commercial transportation sales grew 40% year over year. Sensor sales grew 16% from the year-ago quarter on the back of solid momentum across transportation applications.
Industrial Solutions: The segment generated $1.02 billion, which accounted for 26.6% of net sales. The figure rose 6% year over year. This was driven by robust industrial equipment sales, which grew 33% from the prior-year quarter, owing to the growing capital investment in factory automation applications.
Solid momentum across renewable applications led to 3% growth in energy sales. Recovery in interventional procedures led to 5% year-over-year growth in the medical category.
However, weakness in the commercial aerospace market remained a headwind.
Communications Solutions: The segment generated $603 million, which accounted for 15.8% of net sales. Further, the figure rose 38% year over year. This was driven by solid content growth from cloud applications, which led to a year-over-year rise of 37% in data and devices sales. Appliance sales grew 39% from the prior-year quarter, which contributed well.
Operating Details
Per management, the gross profit was $1.3 billion, which was up 30.3% year over year. As a percentage of revenues, the figure expanded 340 basis points (bps) from the year-ago quarter to 33.1%.
We note that selling, general and administrative expenses, and research and development expenses of $384 million and $173 million rose 9.1% and 16.9% year over year, respectively.
The company’s adjusted operating margin was 18.5% in the reported quarter, which expanded 400 bps year over year.
Balance Sheet & Cash Flow
As of Sep 24, 2021, cash and cash equivalents were $1.2 billion, down from $1.4 billion as of Jun 25, 2021.
Long-term debt was $3.59 billion in the fiscal fourth quarter, down from $3.63 billion in the prior quarter.
The company generated $774 million of cash from operations in the reported quarter compared with $682 million in the previous quarter.
Further, it generated a free cash flow of $536 million.
Guidance
For first-quarter fiscal 2022, TE Connectivity expects net sales growth of 5% and 4% year over year on a reported basis and an organic basis, respectively, to $3.7 billion. The Zacks Consensus Estimate for the same is pegged at $3.8 billion.
Adjusted earnings are projected to be $1.60 per share, reflecting growth of 9% from the year-ago quarter. The consensus mark is pegged at $1.64 per share.
Zacks Rank and Stocks to Consider
Currently, TE Connectivity carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Lam Research LRCX, Coupa Software, Inc. COUP and Trimble Inc. TRMB. All three companies currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rates of Lam Research, Coupa Software and Trimble are pegged at 17.01%, 24.28% and 10%, respectively.
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