TE Connectivity plc (NYSE: TEL)

Sector: Technology Industry: Electronic Components CIK: 0001385157
Market Cap 69.66 Bn
P/B 5.36
P/E 33.75
P/S 3.85
ROIC (Qtr) 14.72
Div Yield % 0.88
Rev 1y % (Qtr) 21.72
Total Debt (Qtr) 5.71 Bn
Debt/Equity (Qtr) 0.44
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About

TE Connectivity Ltd., often referred to as TE Connectivity, is a prominent global industrial technology company that is dedicated to shaping a safer, sustainable, productive, and interconnected future. This is achieved through the development and provision of a comprehensive range of connectivity and sensor solutions. The company's headquarters is located in Switzerland, and it operates in three main segments: Transportation Solutions, Industrial Solutions, and Communications Solutions. TE Connectivity's primary business activities revolve around...

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Investment thesis

Bull case

  • Strong operating cash flow of 4.13B provides robust 0.72x coverage of total debt 5.71B, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 16.21B provides 2.84x coverage of total debt 5.71B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 4.13B provides exceptional 40.85x coverage of interest expenses 101M, showing strong debt service capability.
  • Operating cash flow of 4.13B provides strong 25.16x coverage of stock compensation 164M, indicating sustainable incentive practices.
  • Strong operating cash flow of 4.13B provides 2.09x coverage of SG&A expenses 1.98B, showing efficient operational cost management.

Bear case

  • Operating cash flow of 4.13B barely covers its investment activities of (3.29B), with a coverage ratio of -1.26, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (3.29B) provide weak support for R&D spending of 866M, which is -3.79x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 4.13B provides thin coverage of dividend payments of (823M) with a -5.01 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.25B provide limited coverage of acquisition spending of (2.30B), which is -0.54x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 4.13B is outpaced by equity issuance of (1.26B) (-3.28 ratio), indicating concerning reliance on equity markets for funding operations.

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Electronic Components
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 APH Amphenol Corp /De/ 180.75 Bn 42.33 7.83 15.50 Bn
2 GLW Corning Inc /Ny 111.40 Bn 69.80 7.13 8.43 Bn
3 TEL TE Connectivity plc 69.66 Bn 33.75 3.85 5.71 Bn
4 CLS Celestica Inc 33.17 Bn 47.38 2.94 0.78 Bn
5 JBL Jabil Inc 27.80 Bn 39.54 0.89 3.37 Bn
6 FLEX Flex Ltd. 24.18 Bn 28.38 0.90 5.02 Bn
7 FN Fabrinet 17.82 Bn 47.27 4.58 0.06 Bn
8 TTMI Ttm Technologies Inc 9.30 Bn 70.47 3.34 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.90 3.02
EV to Cash from Ops. EV/CFO 17.96 -590.38
EV to Debt EV to Debt 12.98 107.94
EV to EBIT EV/EBIT 20.82 20.68
EV to EBITDA EV/EBITDA 16.86 -27.60
EV to Free Cash Flow [EV/FCF] EV/FCF 23.54 -537.03
EV to Market Cap EV to Market Cap 1.06 -1.14
EV to Revenue EV/Rev 4.09 96.65
Price to Book Value [P/B] P/B 5.36 6.99
Price to Earnings [P/E] P/E 33.75 -8.83
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.51 1.07
Dividend Payout Ratio % Div Payout % (Qtr) 29.60 20.91
Dividend per Basic Share Div per Share (Qtr) 2.07 0.26
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 19.33 10.42
Interest Coverage Int. cover (Qtr) 35.23 14.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -36.02 -43.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -0.24 125.88
Dividend Growth (1y) % Div 1y % (Qtr) -18.50 -0.04
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 8.51 -176.07
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 21.88 14.38
EBIT Growth (1y) % EBIT 1y % (Qtr) 24.32 15.28
EBT Growth (1y) % EBT 1y % (Qtr) 23.29 7.50
EPS Growth (1y) % EPS 1y % (Qtr) 10.43 2.30
FCF Growth (1y) % FCF 1y % (Qtr) 7.92 9.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 17.59 15.57
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.71 0.77
Cash Payout Ratio Cash Payout (Qtr) 0.16 0.05
Cash Ratio Cash Ratio (Qtr) 0.25 1.48
Current Ratio Curr Ratio (Qtr) 1.65 3.80
Debt to Equity Ratio Debt/Equity (Qtr) 0.44 0.68
Interest Cover Ratio Int Coverage (Qtr) 35.23 14.05
Times Interest Earned Times Interest Earned (Qtr) 35.23 14.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 24.70 21.48
EBIT Margin % EBIT Margin % (Qtr) 19.66 -42.60
EBT Margin % EBT Margin % (Qtr) 19.10 -10.39
Gross Margin % Gross Margin % (Qtr) 35.70 31.37
Net Profit Margin % Net Margin % (Qtr) 11.40 -11.50