A Look at TE Connectivity’s (TEL) Valuation Following Investor Day’s Growth and Margin Roadmap

TE Connectivity (TEL) recently held its Investor Day in Philadelphia, providing a detailed roadmap of growth initiatives and operational targets. Management outlined plans for cycle-resilient revenue growth and higher margins, which has sparked renewed attention on the stock.

See our latest analysis for TE Connectivity.

Momentum around TE Connectivity has picked up following its recent Investor Day, where strong growth targets and a focus on margins created renewed optimism. The stock has surged 55.67% year-to-date in terms of share price return, with a notable 46.02% total shareholder return over the past year. News of new board appointments and major product launches, such as the GEMnet multi-gig connector system, has supported sentiment. However, some short-term volatility suggests the market is weighing both the growth runway and execution risks.

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With shares rallying on renewed optimism and analyst price targets trending higher, the key question now is whether TE Connectivity remains undervalued or if the recent run has already factored in all the expected future growth.

Most Popular Narrative: 19% Undervalued

With TE Connectivity’s most followed narrative setting a fair value estimate well above the latest closing price, analysts see significant upside potential relative to today’s market levels. The rationale behind this projection goes deeper than headline financials, pulling in emerging market trends and long-term margin expansion.

TE Connectivity's rapid revenue growth in AI-driven data center infrastructure demonstrates the increasing global demand for high-performance connectivity, supported by a near tripling of AI-related revenue from $300M to over $800M in fiscal 2025. Continued investment and scaling suggest this trend will fuel further top-line growth and maintain above-segment margins.

Read the complete narrative.

Want to know what’s fueling these bullish projections? It’s not just AI or electrification hype. The narrative hinges on a big leap in future profit margins and ambitious earnings growth playing out in the next few years. The real story? The price target is built on some gutsy financial assumptions you’ll want to see for yourself. Dive deeper to uncover what drives this number.

Result: Fair Value of $270 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain. Unexpected weakness in key markets or rising integration costs could quickly challenge the upbeat growth and margin narrative.

Find out about the key risks to this TE Connectivity narrative.

Another View: Market Multiples Raise Questions

While analyst models suggest TE Connectivity is undervalued based on its future growth and optimism, the market’s preferred price-to-earnings ratio tells a different story. TE's ratio of 34.9x is higher than both its industry average (23.4x) and peer average (31.9x), and it also exceeds the fair ratio of 32.4x. This premium hints investors may already be pricing in much of the good news, raising questions about whether further upside is justified from these levels or if risk is creeping in. What should investors make of this disconnect?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own TE Connectivity Narrative

If you see things differently or want to dig into the numbers yourself, it's easy to piece together your own perspective in just a few minutes. Do it your way.

A great starting point for your TE Connectivity research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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