SCHAFFHAUSEN - TE Connectivity (NYSE: NYSE:TEL), a global industrial technology company, reported second-quarter adjusted earnings per share (EPS) of $1.86, surpassing analyst expectations by $0.03.
The company's net sales for the quarter reached $3.97 billion, aligning with their own guidance and slightly exceeding the consensus estimate of $3.96 billion. Despite this, sales saw a decline of 5% compared to the same quarter last year and a 3% decrease organically. On a sequential basis, however, sales grew by 4% on a reported basis and 3% organically.
TE Connectivity's GAAP diluted EPS from continuing operations stood at $1.75, marking a 13% increase year over year (YoY). The company also experienced a significant improvement in operating margins, which were reported at 17.4%, and adjusted operating margins at 18.5%, up 250 basis points YoY.
This margin expansion was attributed to robust operational performance across all three of the company's segments. Additionally, TE Connectivity generated a record cash flow in the first half of the fiscal year, with operating activities bringing in $1.4 billion, an 18% increase YoY, and free cash flow rising 32% YoY to $1.1 billion.
Looking ahead to the third quarter of fiscal 2024, TE Connectivity expects net sales of approximately $4.0 billion. The company forecasts GAAP EPS from continuing operations to be around $1.71, a 2% increase YoY, and adjusted EPS to be about $1.85, up 5% YoY. This guidance accounts for a $0.15 YoY headwind from tax and currency exchange rates.
CEO Terrence Curtin commented on the results, "Our teams delivered EPS above our guidance this quarter with double-digit earnings growth driven by margin expansion in all three of our segments, while continuing to navigate a dynamic global market environment." He also highlighted the company's sequential improvement in orders across all segments and the strong cash generation, which set a company record.
TE Connectivity's performance this quarter reflects its strategic investments in trends such as hybrid and electric vehicles, renewable energy, and artificial intelligence, which Curtin believes will drive the company's long-term profitable growth.
InvestingPro Insights
TE Connectivity (NYSE: TEL), a global leader in connectivity and sensor solutions, has shown resilience in its financial performance, as reflected in the recent quarterly earnings report. To add further context to the company's financial health and investment attractiveness, let's consider some key metrics and insights from InvestingPro.
InvestingPro Data shows TE Connectivity's market capitalization stands at a robust $44.39 billion, supported by a solid Price-to-Earnings (P/E) ratio of 13.66. This valuation metric is particularly compelling when considering the P/E ratio adjusted for the last twelve months as of Q1 2024, which sits at an even more attractive 12.45. Additionally, the company's PEG Ratio for the same period is notably low at 0.27, suggesting that the stock may be undervalued relative to its earnings growth potential.
In terms of financial stability, TE Connectivity's dividend yield as of early 2024 is 1.82%, which is a testament to the company's ability to maintain consistent shareholder returns. This is underscored by an InvestingPro Tip highlighting that TE Connectivity has raised its dividend for 14 consecutive years, indicating a reliable and growing income stream for investors.
Another InvestingPro Tip points to the positive sentiment among analysts, with 4 analysts having revised their earnings estimates upwards for the upcoming period. This optimism is likely rooted in the company's strategic positioning within the Electronic Equipment, Instruments & Components industry, where it is considered a prominent player.
For investors seeking more comprehensive analysis and insights, InvestingPro offers additional tips on TE Connectivity. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a total of 11 more InvestingPro Tips that provide a deeper dive into the company's financials and market performance.
TE Connectivity's continued dividend growth and favorable analyst revisions are in line with the CEO's positive outlook on the company's strategic investments and its ability to drive long-term profitable growth. With a strong track record and solid financial metrics, TE Connectivity remains an interesting prospect for investors keeping an eye on industrial technology and connectivity solutions.
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