Results: TE Connectivity Ltd. Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in TE Connectivity Ltd. (NYSE:TEL) had a good week, as its shares rose 9.0% to close at US$144 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$3.8b were what the analysts expected, TE Connectivity surprised by delivering a (statutory) profit of US$5.76 per share, an impressive 248% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TE Connectivity after the latest results.

View our latest analysis for TE Connectivity

Taking into account the latest results, TE Connectivity's 18 analysts currently expect revenues in 2024 to be US$16.1b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$10.65, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$16.4b and earnings per share (EPS) of US$7.17 in 2024. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at US$157, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic TE Connectivity analyst has a price target of US$175 per share, while the most pessimistic values it at US$135. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that TE Connectivity's revenue growth is expected to slow, with the forecast 0.8% annualised growth rate until the end of 2024 being well below the historical 5.3% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than TE Connectivity.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards TE Connectivity following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$157, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on TE Connectivity. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for TE Connectivity going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for TE Connectivity that you should be aware of.

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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.