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At US$120, Is TE Connectivity Ltd. (NYSE:TEL) Worth Looking At Closely?

TE Connectivity Ltd. (NYSE:TEL) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$135 at one point, and dropping to the lows of US$120. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether TE Connectivity's current trading price of US$120 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at TE Connectivity’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for TE Connectivity

What's The Opportunity In TE Connectivity?

According to my valuation model, TE Connectivity seems to be fairly priced at around 8.88% above my intrinsic value, which means if you buy TE Connectivity today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $110.40, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because TE Connectivity’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can We Expect Decent Returns From TE Connectivity?

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What kind of returns can we expect from TE Connectivity in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. We can determine the quality of a stock many ways; one way is to look at how much return it generates relative to the money we’ve invested in the stock. TE Connectivity is expected to return 20% of your investment in the next couple of years if you buy the stock today. This is a solid return on your investment which builds up the case for owning the stock.

What This Means For You

Are you a shareholder? It seems like the market has already priced in TEL’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? And will you have enough conviction to buy should the price fluctuates below the true value?

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Are you a potential investor? If you’ve been keeping an eye on TEL for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for TEL, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Diving deeper into the forecasts for TE Connectivity mentioned earlier will help you understand how analysts view the stock going forward. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in TE Connectivity, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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