TE CONNECTIVITY PLC (TEL) Stock Fundamental Analysis
NYSE:TEL - New York Stock Exchange, Inc. - IE000IVNQZ81 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to TEL. TEL was compared to 124 industry peers in the Electronic Equipment, Instruments & Components industry. Both the health and profitability get an excellent rating, making TEL a very profitable company, without any liquidiy or solvency issues. TEL has a decent growth rate and is not valued too expensively. TEL also has an excellent dividend rating. This makes TEL very considerable for dividend and quality investing!
1. Profitability
1.1 Basic Checks
TEL had positive earnings in the past year.
In the past year TEL had a positive cash flow from operations.
TEL had positive earnings in 4 of the past 5 years.
In the past 5 years TEL always reported a positive cash flow from operatings.
1.2 Ratios
TEL has a Return On Assets of 8.55%. This is amongst the best in the industry. TEL outperforms 88.71% of its industry peers.
TEL has a Return On Equity of 15.46%. This is amongst the best in the industry. TEL outperforms 84.68% of its industry peers.
TEL has a Return On Invested Capital of 14.02%. This is amongst the best in the industry. TEL outperforms 91.13% of its industry peers.
TEL had an Average Return On Invested Capital over the past 3 years of 14.05%. This is above the industry average of 9.26%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.55% | ||
| ROE | 15.46% | ||
| ROIC | 14.02% |
ROA(3y)11.48%
ROA(5y)8.75%
ROE(3y)21.62%
ROE(5y)16.71%
ROIC(3y)14.05%
ROIC(5y)12.99%
1.3 Margins
TEL's Profit Margin of 12.10% is amongst the best of the industry. TEL outperforms 87.10% of its industry peers.
In the last couple of years the Profit Margin of TEL has grown nicely.
Looking at the Operating Margin, with a value of 18.93%, TEL belongs to the top of the industry, outperforming 95.97% of the companies in the same industry.
In the last couple of years the Operating Margin of TEL has grown nicely.
The Gross Margin of TEL (34.65%) is comparable to the rest of the industry.
TEL's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.93% | ||
| PM (TTM) | 12.1% | ||
| GM | 34.65% |
OM growth 3Y1.36%
OM growth 5Y2.3%
PM growth 3Y9.97%
PM growth 5Y8%
GM growth 3Y1.69%
GM growth 5Y1.05%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so TEL is creating value.
The number of shares outstanding for TEL has been reduced compared to 1 year ago.
TEL has less shares outstanding than it did 5 years ago.
The debt/assets ratio for TEL has been reduced compared to a year ago.
2.2 Solvency
TEL has an Altman-Z score of 4.42. This indicates that TEL is financially healthy and has little risk of bankruptcy at the moment.
TEL's Altman-Z score of 4.42 is fine compared to the rest of the industry. TEL outperforms 75.00% of its industry peers.
TEL has a debt to FCF ratio of 1.45. This is a very positive value and a sign of high solvency as it would only need 1.45 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 1.45, TEL belongs to the best of the industry, outperforming 80.65% of the companies in the same industry.
TEL has a Debt/Equity ratio of 0.26. This is a healthy value indicating a solid balance between debt and equity.
TEL has a Debt to Equity ratio of 0.26. This is comparable to the rest of the industry: TEL outperforms 42.74% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.26 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | 4.42 |
ROIC/WACC2.07
WACC6.76%
2.3 Liquidity
A Current Ratio of 1.68 indicates that TEL should not have too much problems paying its short term obligations.
TEL has a worse Current ratio (1.68) than 66.94% of its industry peers.
TEL has a Quick Ratio of 1.10. This is a normal value and indicates that TEL is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.10, TEL is doing worse than 74.19% of the companies in the same industry.
The current and quick ratio evaluation for TEL is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.68 | ||
| Quick Ratio | 1.1 |
3. Growth
3.1 Past
TEL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.95%, which is quite good.
TEL shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.41% yearly.
Looking at the last year, TEL shows a decrease in Revenue. The Revenue has decreased by -1.09% in the last year.
The Revenue has been growing slightly by 3.33% on average over the past years.
EPS 1Y (TTM)8.95%
EPS 3Y5.06%
EPS 5Y6.41%
EPS Q2Q%5.98%
Revenue 1Y (TTM)-1.09%
Revenue growth 3Y2.02%
Revenue growth 5Y3.33%
Sales Q2Q%0.13%
3.2 Future
The Earnings Per Share is expected to grow by 8.08% on average over the next years. This is quite good.
Based on estimates for the next years, TEL will show a small growth in Revenue. The Revenue will grow by 5.70% on average per year.
EPS Next Y7.48%
EPS Next 2Y8.9%
EPS Next 3Y9.38%
EPS Next 5Y8.08%
Revenue Next Year2.62%
Revenue Next 2Y4.85%
Revenue Next 3Y5.32%
Revenue Next 5Y5.7%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 16.85, which indicates a correct valuation of TEL.
Based on the Price/Earnings ratio, TEL is valued a bit cheaper than the industry average as 75.81% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of TEL to the average of the S&P500 Index (28.29), we can say TEL is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 14.41, the valuation of TEL can be described as correct.
Based on the Price/Forward Earnings ratio, TEL is valued a bit cheaper than the industry average as 78.23% of the companies are valued more expensively.
TEL's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.08.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.85 | ||
| Fwd PE | 14.41 |
4.2 Price Multiples
TEL's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. TEL is cheaper than 75.00% of the companies in the same industry.
83.06% of the companies in the same industry are more expensive than TEL, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.29 | ||
| EV/EBITDA | 10.87 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
TEL has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.25
PEG (5Y)2.63
EPS Next 2Y8.9%
EPS Next 3Y9.38%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.20%, TEL has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.40, TEL pays a better dividend. On top of this TEL pays more dividend than 91.94% of the companies listed in the same industry.
TEL's Dividend Yield is comparable with the S&P500 average which is at 2.52.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
5.2 History
The dividend of TEL is nicely growing with an annual growth rate of 6.79%!
TEL has paid a dividend for at least 10 years, which is a reliable track record.
TEL has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)6.79%
Div Incr Years14
Div Non Decr Years17
5.3 Sustainability
TEL pays out 39.94% of its income as dividend. This is a sustainable payout ratio.
TEL's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP39.94%
EPS Next 2Y8.9%
EPS Next 3Y9.38%
129.24
+2.34 (+1.84%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryElectronic Equipment, Instruments & Components
Earnings (Last)
Earnings (Next)
Inst Owners92.28%
Inst Owner Change0.31%
Ins Owners0.12%
Ins Owner Change4.58%
Market Cap38.56B
Analysts75.2
Price Target176.02 (36.2%)
Short Float %1.07%
Short Ratio1.98
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
Yearly Dividend2.48
Dividend Growth(5Y)6.79%
DP39.94%
Div Incr Years14
Div Non Decr Years17
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.71%
Min EPS beat(2)-0.77%
Max EPS beat(2)2.19%
EPS beat(4)3
Avg EPS beat(4)0.96%
Min EPS beat(4)-0.77%
Max EPS beat(4)2.19%
EPS beat(8)7
Avg EPS beat(8)2.45%
EPS beat(12)10
Avg EPS beat(12)2.56%
EPS beat(16)14
Avg EPS beat(16)3.61%
Revenue beat(2)1
Avg Revenue beat(2)-1.25%
Min Revenue beat(2)-2.74%
Max Revenue beat(2)0.25%
Revenue beat(4)1
Avg Revenue beat(4)-1.29%
Min Revenue beat(4)-2.74%
Max Revenue beat(4)0.25%
Revenue beat(8)2
Avg Revenue beat(8)-0.55%
Revenue beat(12)6
Avg Revenue beat(12)0.61%
Revenue beat(16)10
Avg Revenue beat(16)0.99%
PT rev (1m)0%
PT rev (3m)1.77%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.69%
EPS NY rev (1m)-0.55%
EPS NY rev (3m)-0.71%
Revenue NQ rev (1m)0.12%
Revenue NQ rev (3m)-3.14%
Revenue NY rev (1m)0.06%
Revenue NY rev (3m)-1.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.85 | ||
| Fwd PE | 14.41 | ||
| P/S | 2.43 | ||
| P/FCF | 13.29 | ||
| P/OCF | 10.6 | ||
| P/B | 3.11 | ||
| P/tB | 7.14 | ||
| EV/EBITDA | 10.87 |
EPS(TTM)7.67
EY5.93%
EPS(NY)8.97
Fwd EY6.94%
FCF(TTM)9.73
FCFY7.53%
OCF(TTM)12.19
OCFY9.43%
SpS53.13
BVpS41.59
TBVpS18.09
PEG (NY)2.25
PEG (5Y)2.63
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.55% | ||
| ROE | 15.46% | ||
| ROCE | 16.7% | ||
| ROIC | 14.02% | ||
| ROICexc | 15.07% | ||
| ROICexgc | 25.97% | ||
| OM | 18.93% | ||
| PM (TTM) | 12.1% | ||
| GM | 34.65% | ||
| FCFM | 18.31% |
ROA(3y)11.48%
ROA(5y)8.75%
ROE(3y)21.62%
ROE(5y)16.71%
ROIC(3y)14.05%
ROIC(5y)12.99%
ROICexc(3y)15.24%
ROICexc(5y)14.04%
ROICexgc(3y)26.54%
ROICexgc(5y)25.01%
ROCE(3y)16.74%
ROCE(5y)15.48%
ROICexcg growth 3Y-1.57%
ROICexcg growth 5Y1.2%
ROICexc growth 3Y0.91%
ROICexc growth 5Y3.66%
OM growth 3Y1.36%
OM growth 5Y2.3%
PM growth 3Y9.97%
PM growth 5Y8%
GM growth 3Y1.69%
GM growth 5Y1.05%
F-Score7
Asset Turnover0.71
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.26 | ||
| Debt/FCF | 1.45 | ||
| Debt/EBITDA | 0.86 | ||
| Cap/Depr | 89.73% | ||
| Cap/Sales | 4.63% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 95.21% | ||
| Profit Quality | 151.3% | ||
| Current Ratio | 1.68 | ||
| Quick Ratio | 1.1 | ||
| Altman-Z | 4.42 |
F-Score7
WACC6.76%
ROIC/WACC2.07
Cap/Depr(3y)90.78%
Cap/Depr(5y)88.17%
Cap/Sales(3y)4.52%
Cap/Sales(5y)4.56%
Profit Quality(3y)94.42%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)8.95%
EPS 3Y5.06%
EPS 5Y6.41%
EPS Q2Q%5.98%
EPS Next Y7.48%
EPS Next 2Y8.9%
EPS Next 3Y9.38%
EPS Next 5Y8.08%
Revenue 1Y (TTM)-1.09%
Revenue growth 3Y2.02%
Revenue growth 5Y3.33%
Sales Q2Q%0.13%
Revenue Next Year2.62%
Revenue Next 2Y4.85%
Revenue Next 3Y5.32%
Revenue Next 5Y5.7%
EBIT growth 1Y7.91%
EBIT growth 3Y3.4%
EBIT growth 5Y5.71%
EBIT Next Year30.48%
EBIT Next 3Y14.12%
EBIT Next 5Y10.8%
FCF growth 1Y66.97%
FCF growth 3Y12.09%
FCF growth 5Y10.83%
OCF growth 1Y44.46%
OCF growth 3Y9.12%
OCF growth 5Y7.5%