TE Connectivity TEL

NYSE TEL

$205.12 +0.13 (+0.06%)

As of: Sep 9, 2026 · 10:37 AM EDT

Key Stats

Market Cap59.76 Bn

P/E19.36

P/S3.09

Div. Yield0.01

Total Debt (Qtr)5.63 Bn

Revenue Growth (1y) (Qtr)13.81

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About

TE Connectivity plc is a global industrial technology leader that creates a safer sustainable productive and connected future. The company designs and manufactures a broad range of connectivity and sensor solutions that enable the distribution of power signal and data. Its products support next generation transportation energy networks automated factories data centers enabling artificial intelligence and other high growth markets. TE Connectivity plc generates revenue by…

TE Connectivity plc generates revenue by selling terminals and connector systems and components sensors heat shrink tubing relays application tooling interventional medical components wire and cable filters and related products. These products are sold to manufacturers in sectors such as automotive commercial transportation data centers automation aerospace defense medical and energy. The company reaches customers primarily through direct sales which account for about three quarters of total revenue and supplements this with third party distributors.

TE Connectivity plc operates through two reportable segments Transportation Solutions and Industrial Solutions.

The Transportation Solutions segment designs and manufactures terminals and connector systems and components sensors heat shrink tubing relays and application tooling. Its products are used in automotive applications representing about three quarters of the segment’s sales. The segment also serves commercial transportation markets such as heavy trucks construction agriculture and buses and provides sensor solutions used across automotive industrial equipment commercial transportation medical aerospace and consumer applications.
The Industrial Solutions segment supplies terminals and connector systems and components interventional medical components heat shrink tubing relays wire and cable filters and related products. Its products support digital data networks automation and connected living aerospace defense and marine energy and medical end markets. The segment serves customers in data centers factory automation building automation smart city infrastructure rail systems home appliances aerospace defense marine power generation transmission distribution and medical imaging diagnostic surgical and minimally invasive applications.

TE Connectivity plc holds a strong position in the global connectivity and sensor markets thanks to its broad product portfolio deep engineering expertise and long standing customer relationships. In the Transportation Solutions segment the company competes with Yazaki Aptiv Sumitomo Sensata Honeywell Molex and Amphenol. In the Industrial Solutions segment primary competitors include Amphenol Hubbell Carlisle Companies Integer Holdings Molex Omron JST and Korea Electric Terminal (KET). The firm’s competitive advantages stem from its diversified customer base global manufacturing footprint and continuous investment in research and development that enables rapid innovation. These factors help TE Connectivity plc maintain resilience against cyclical downturns and differentiate itself from more narrowly focused peers.

TE Connectivity plc serves a diverse set of manufacturers across multiple industries including automotive commercial transportation data centers automation aerospace defense medical and energy. Its customer base comprises original equipment manufacturers contract manufacturers and distributors that rely on the company’s connectivity and sensor solutions for their products. No single customer accounted for a significant portion of sales in recent years reflecting the breadth of the company’s market reach.

Investment Thesis

▲ Bull case

The company’s artificial intelligence franchise is emerging as a multi‑year structural growth driver that the market may be underestimating. Management reported $300 million of AI related sales in fiscal 2024 and explicitly stated that they expect this figure to double to approximately $600 million in fiscal 2025 based on design wins across a broad customer base that includes hyperscalers and semiconductor firms. The commentary highlighted that the underlying momentum is being fueled by continued cloud capex expansion which is projected to grow at least 20% year over year providing a steady pipeline of new programs. Engineering investments are being made to increase capacity and technical expertise ensuring that the firm can support the ramp of these design wins without bottlenecks. This positions the AI business to potentially exceed the $1 billion run rate sooner than anticipated especially if cloud providers accelerate their AI infrastructure spend. The diversification across customers reduces concentration risk and makes the revenue stream more resilient to any single customer budget shift. Overall the AI opportunity represents a tangible catalyst for both top line growth and margin expansion as higher value content is added to data center and networking solutions.
The Transportation segment is benefiting from a powerful combination of electrification and electronification trends that are delivering consistent content outperformance versus vehicle production. Leadership noted that in Asia Pacific where over seventy% of electric and hybrid vehicle production occurs the company achieved mid‑teen revenue growth while regional auto production was only up mid‑single digits. This outperformance is driven not only by the shift to electric powertrains but also by the increasing amount of data connectivity and advanced electronics being integrated into all vehicle architectures. The firm’s deep relationships with both multinational and local Chinese OEMs give it a unique advantage as local manufacturers gain market share and the company expands its footprint with a new automotive factory in China. Management reiterated its long term expectation of four to six points of content growth per vehicle supported by ongoing electronification trends that are independent of powertrain type. The continued investment in Asian operations to capture EV growth and the focus on higher speed lower latency interconnects for next generation vehicles further reinforce the structural nature of this advantage. As a result the Transportation business is poised to deliver steady margin accretion even if overall vehicle production fluctuates.
Operational excellence and the new segment structure are creating margin expansion opportunities that have not yet been fully priced into the stock. The company reported a 220 basis point increase in adjusted operating margin for the full year 2024 driven by disciplined execution across the Transportation and Communications segments where margins reached roughly twenty%. The upcoming shift to a two segment model grouping Industrial Solutions with Communications is expected to unlock synergies as the combined segment can leverage shared cost structures and cross selling opportunities. Management highlighted that the Industrial segment is already on a path to reach the high teens in margin and that with volume recovery in aerospace defense energy and medical businesses the blended margin could approach twenty% over the medium term. Cost actions including footprint optimization and disciplined capital expenditure are being maintained while the firm continues to invest selectively in high growth areas such as AI capacity expansion. The combination of operating leverage from higher volumes and ongoing efficiency initiatives suggests that adjusted operating margins could continue to expand beyond the current levels providing upside to earnings per share.
Strong free cash flow generation and a disciplined capital allocation framework provide a solid foundation for shareholder returns and strategic flexibility. Fiscal 2024 free cash flow reached approximately $2.8 billion representing a seventeen% increase year over year and exceeding the prior year’s record by $400 million. The firm converted over one hundred% of adjusted net income into free cash flow demonstrating the high quality of its earnings. Leadership announced an additional $2.5 billion increase to the share repurchase authorization signaling confidence in sustained cash generation and a commitment to returning capital to investors. The balance sheet remains robust with low leverage and a cash tax rate that stays in the mid teens despite the upcoming Pillar two global minimum tax impact which primarily affects the adjusted effective tax rate. This cash generation capability also creates optionality for bolt on acquisitions at attractive valuations as the deal environment improves. Together these factors support a sustainable dividend growth trajectory and the ability to deploy capital where it can generate the highest long term returns.

The company’s artificial intelligence franchise is emerging as a multi‑year structural growth driver that the market may be underestimating. Management reported $300 million of AI related sales in fiscal 2024 and explicitly stated that they expect this figure to double to approximately $600 million in fiscal 2025 based on design wins across a broad customer base that includes hyperscalers and semiconductor firms. The commentary highlighted that the underlying momentum is being fueled by continued cloud capex expansion which is projected to grow at least 20% year over year providing a steady pipeline of new programs. Engineering investments are being made to increase capacity and technical expertise ensuring that the firm can support the ramp of these design wins without bottlenecks. This positions the AI business to potentially exceed the $1 billion run rate sooner than anticipated especially if cloud providers accelerate their AI infrastructure spend. The diversification across customers reduces concentration risk and makes the revenue stream more resilient to any single customer budget shift. Overall the AI opportunity represents a tangible catalyst for both top line growth and margin expansion as higher value content is added to data center and networking solutions.
The Transportation segment is benefiting from a powerful combination of electrification and electronification trends that are delivering consistent content outperformance versus vehicle production. Leadership noted that in Asia Pacific where over seventy% of electric and hybrid vehicle production occurs the company achieved mid‑teen revenue growth while regional auto production was only up mid‑single digits. This outperformance is driven not only by the shift to electric powertrains but also by the increasing amount of data connectivity and advanced electronics being integrated into all vehicle architectures. The firm’s deep relationships with both multinational and local Chinese OEMs give it a unique advantage as local manufacturers gain market share and the company expands its footprint with a new automotive factory in China. Management reiterated its long term expectation of four to six points of content growth per vehicle supported by ongoing electronification trends that are independent of powertrain type. The continued investment in Asian operations to capture EV growth and the focus on higher speed lower latency interconnects for next generation vehicles further reinforce the structural nature of this advantage. As a result the Transportation business is poised to deliver steady margin accretion even if overall vehicle production fluctuates.
Operational excellence and the new segment structure are creating margin expansion opportunities that have not yet been fully priced into the stock. The company reported a 220 basis point increase in adjusted operating margin for the full year 2024 driven by disciplined execution across the Transportation and Communications segments where margins reached roughly twenty%. The upcoming shift to a two segment model grouping Industrial Solutions with Communications is expected to unlock synergies as the combined segment can leverage shared cost structures and cross selling opportunities. Management highlighted that the Industrial segment is already on a path to reach the high teens in margin and that with volume recovery in aerospace defense energy and medical businesses the blended margin could approach twenty% over the medium term. Cost actions including footprint optimization and disciplined capital expenditure are being maintained while the firm continues to invest selectively in high growth areas such as AI capacity expansion. The combination of operating leverage from higher volumes and ongoing efficiency initiatives suggests that adjusted operating margins could continue to expand beyond the current levels providing upside to earnings per share.
Strong free cash flow generation and a disciplined capital allocation framework provide a solid foundation for shareholder returns and strategic flexibility. Fiscal 2024 free cash flow reached approximately $2.8 billion representing a seventeen% increase year over year and exceeding the prior year’s record by $400 million. The firm converted over one hundred% of adjusted net income into free cash flow demonstrating the high quality of its earnings. Leadership announced an additional $2.5 billion increase to the share repurchase authorization signaling confidence in sustained cash generation and a commitment to returning capital to investors. The balance sheet remains robust with low leverage and a cash tax rate that stays in the mid teens despite the upcoming Pillar two global minimum tax impact which primarily affects the adjusted effective tax rate. This cash generation capability also creates optionality for bolt on acquisitions at attractive valuations as the deal environment improves. Together these factors support a sustainable dividend growth trajectory and the ability to deploy capital where it can generate the highest long term returns.

▼ Bear case

Industrial equipment and factory automation remain a notable headwind that could offset growth elsewhere and the timeline for recovery is uncertain. Management acknowledged ongoing weakness in the factory automation market especially in Europe where the business is experiencing a bottoming pattern with only slight improvements seen in Asia Pacific. The Sensors business is undergoing a structured exit of non core product lines which will represent a roughly $50 million drag on revenue in 2025 before the program is completed. This destocking activity and the shift to focus on automotive heavy vehicle medical and factory automation markets suggest that the industrial segment may continue to face volume pressure until end market demand stabilizes. While aerospace defense and energy markets are strong the overall industrial mix is still weighted toward the weaker factory automation and building automation categories. The company’s expectation that these markets will return to growth in 2025 depends on a macroeconomic rebound that has not yet materialized. If the recovery lags the industrial segment could continue to dilute overall margins and earnings per share.
The AI growth narrative while promising is inherently lumpy and tied to the capital expenditure cycles of a few large cloud and semiconductor customers which introduces volatility risk. Order patterns in the Communications segment showed a sequential decline despite strong year over year growth highlighting the lumpiness of AI related programs. Management noted that orders were up almost one hundred% in the prior quarter and up forty% in the most recent quarter reflecting the timing of design win conversions and customer capex decisions. Any slowdown in cloud capex or a shift in spending priorities by hyperscalers could cause AI revenue to fall short of the doubling target for fiscal 2025. The firm’s reliance on a broad customer base does mitigate concentration risk but does not eliminate the exposure to macro level shifts in technology investment. Additionally the engineering investments being made to support AI ramps increase fixed costs which could pressure margins if revenue growth does not keep pace. Investors should watch for any signs of delayed customer commitments or reduced capex guidance that could undermine the AI thesis.
Tax and currency headwinds are likely to adjust the effective tax rate upward and could weigh on adjusted earnings per share despite stable cash tax performance. The upcoming implementation of the Pillar two global minimum tax is expected to push the adjusted effective tax rate into the twenty three to twenty four% range for fiscal 2025 compared with the approximately twenty two% rate seen in 2024. While management indicated that the cash tax rate will remain in the mid teens the adjusted EPS figure will reflect the higher tax burden which may temper the perception of earnings growth. Currency exchange continues to be a factor as the company reported a $0.39 headwind to adjusted EPS in fiscal 2024 due to a stronger dollar and similar effects could reappear if the dollar strengthens again. Macro economic uncertainties such as fluctuating interest rates and geopolitical tensions can also influence customer capex decisions and indirectly affect the company’s top line. These factors collectively represent a drag that may not be fully captured in the current consensus estimates.
The company’s significant exposure to Asia Pacific and particularly China creates concentration risk that could be exacerbated by shifting trade dynamics or local competitive pressures. Over forty% of the firm’s automotive revenue originates from China and the growth story in that region hinges on maintaining strong relationships with both multinational and local Chinese OEMs. Management noted that local Chinese OEMs now hold two thirds of the vehicle market share while multinationals hold one third underscoring the importance of winning with domestic players. Any escalation in trade restrictions changes in local content requirements or a rise in competitive pressure from indigenous suppliers could jeopardize the company’s market share and pricing power. Additionally the firm’s reliance on Asian manufacturing capacity makes it vulnerable to supply chain disruptions natural disasters or regulatory shifts in the region. While the company continues to invest in expanding its footprint in China the potential for a slowdown in EV adoption or a shift in consumer preferences could also impact the long term growth trajectory. These regional risks deserve close attention as they could offset the positive trends seen in other parts of the portfolio.

Industrial equipment and factory automation remain a notable headwind that could offset growth elsewhere and the timeline for recovery is uncertain. Management acknowledged ongoing weakness in the factory automation market especially in Europe where the business is experiencing a bottoming pattern with only slight improvements seen in Asia Pacific. The Sensors business is undergoing a structured exit of non core product lines which will represent a roughly $50 million drag on revenue in 2025 before the program is completed. This destocking activity and the shift to focus on automotive heavy vehicle medical and factory automation markets suggest that the industrial segment may continue to face volume pressure until end market demand stabilizes. While aerospace defense and energy markets are strong the overall industrial mix is still weighted toward the weaker factory automation and building automation categories. The company’s expectation that these markets will return to growth in 2025 depends on a macroeconomic rebound that has not yet materialized. If the recovery lags the industrial segment could continue to dilute overall margins and earnings per share.
The AI growth narrative while promising is inherently lumpy and tied to the capital expenditure cycles of a few large cloud and semiconductor customers which introduces volatility risk. Order patterns in the Communications segment showed a sequential decline despite strong year over year growth highlighting the lumpiness of AI related programs. Management noted that orders were up almost one hundred% in the prior quarter and up forty% in the most recent quarter reflecting the timing of design win conversions and customer capex decisions. Any slowdown in cloud capex or a shift in spending priorities by hyperscalers could cause AI revenue to fall short of the doubling target for fiscal 2025. The firm’s reliance on a broad customer base does mitigate concentration risk but does not eliminate the exposure to macro level shifts in technology investment. Additionally the engineering investments being made to support AI ramps increase fixed costs which could pressure margins if revenue growth does not keep pace. Investors should watch for any signs of delayed customer commitments or reduced capex guidance that could undermine the AI thesis.
Tax and currency headwinds are likely to adjust the effective tax rate upward and could weigh on adjusted earnings per share despite stable cash tax performance. The upcoming implementation of the Pillar two global minimum tax is expected to push the adjusted effective tax rate into the twenty three to twenty four% range for fiscal 2025 compared with the approximately twenty two% rate seen in 2024. While management indicated that the cash tax rate will remain in the mid teens the adjusted EPS figure will reflect the higher tax burden which may temper the perception of earnings growth. Currency exchange continues to be a factor as the company reported a $0.39 headwind to adjusted EPS in fiscal 2024 due to a stronger dollar and similar effects could reappear if the dollar strengthens again. Macro economic uncertainties such as fluctuating interest rates and geopolitical tensions can also influence customer capex decisions and indirectly affect the company’s top line. These factors collectively represent a drag that may not be fully captured in the current consensus estimates.
The company’s significant exposure to Asia Pacific and particularly China creates concentration risk that could be exacerbated by shifting trade dynamics or local competitive pressures. Over forty% of the firm’s automotive revenue originates from China and the growth story in that region hinges on maintaining strong relationships with both multinational and local Chinese OEMs. Management noted that local Chinese OEMs now hold two thirds of the vehicle market share while multinationals hold one third underscoring the importance of winning with domestic players. Any escalation in trade restrictions changes in local content requirements or a rise in competitive pressure from indigenous suppliers could jeopardize the company’s market share and pricing power. Additionally the firm’s reliance on Asian manufacturing capacity makes it vulnerable to supply chain disruptions natural disasters or regulatory shifts in the region. While the company continues to invest in expanding its footprint in China the potential for a slowdown in EV adoption or a shift in consumer preferences could also impact the long term growth trajectory. These regional risks deserve close attention as they could offset the positive trends seen in other parts of the portfolio.

Segments Breakdown of Revenue (2025)

Peer group

Peer Comparison

Companies in the Electrical Equipment

S.No.	Ticker	Company	match	Market Cap	P/E	P/S	Total Debt (Qtr)
1	APH	Amphenol Corp /De/	primary	201.24 Bn	38.79	6.94	18.81 Bn
2	ETN	Eaton Corp plc	primary	162.58 Bn	42.39	5.41	22.70 Bn
3	VRT	Vertiv Holdings Co	primary	106.64 Bn	61.57	9.29	2.94 Bn
4	TEL	TE Connectivity plc	primary	59.76 Bn	19.36	3.09	5.63 Bn
5	NVT	nVent Electric plc	primary	25.97 Bn	43.40	5.37	1.51 Bn
6	HUBB	Hubbell Inc	primary	24.26 Bn	26.74	3.90	5.37 Bn
7	AEIS	Advanced Energy Industries Inc	primary	11.22 Bn	43.54	5.50	1.26 Bn
8	APTV	Aptiv PLC	primary	9.56 Bn	34.16	0.51	5.38 Bn

TE Connectivity TEL

About

Investment Thesis

Segments Breakdown of Revenue (2025)

Peer Comparison

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