TE CONNECTIVITY PLC (TEL) Stock Fundamental Analysis
NYSE:TEL - New York Stock Exchange, Inc. - IE000IVNQZ81 - Common Stock - Currency: USD
TEL gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 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 correct valuation and a medium growth rate. Finally TEL also has an excellent dividend rating. With these ratings, TEL could be worth investigating further for dividend and quality investing!.
1. Profitability
1.1 Basic Checks
In the past year TEL was profitable.
TEL had a positive operating cash flow in the past year.
TEL had positive earnings in 4 of the past 5 years.
Each year in the past 5 years TEL had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.85%, TEL belongs to the top of the industry, outperforming 80.65% of the companies in the same industry.
With a decent Return On Equity value of 11.75%, TEL is doing good in the industry, outperforming 79.84% of the companies in the same industry.
TEL has a Return On Invested Capital of 13.51%. This is amongst the best in the industry. TEL outperforms 90.32% 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 9.65%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.85% | ||
| ROE | 11.75% | ||
| ROIC | 13.51% |
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
Looking at the Profit Margin, with a value of 8.78%, TEL belongs to the top of the industry, outperforming 82.26% of the companies in the same industry.
TEL's Profit Margin has improved in the last couple of years.
TEL has a Operating Margin of 19.30%. This is amongst the best in the industry. TEL outperforms 97.58% of its industry peers.
In the last couple of years the Operating Margin of TEL has grown nicely.
TEL has a Gross Margin (34.99%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of TEL has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.3% | ||
| PM (TTM) | 8.78% | ||
| GM | 34.99% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), TEL is creating value.
The number of shares outstanding for TEL has been reduced compared to 1 year ago.
The number of shares outstanding for TEL has been reduced compared to 5 years ago.
TEL has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 4.90 indicates that TEL is not in any danger for bankruptcy at the moment.
The Altman-Z score of TEL (4.90) is better than 73.39% of its industry peers.
TEL has a debt to FCF ratio of 1.98. This is a very positive value and a sign of high solvency as it would only need 1.98 years to pay back of all of its debts.
TEL has a Debt to FCF ratio of 1.98. This is in the better half of the industry: TEL outperforms 77.42% of its industry peers.
TEL has a Debt/Equity ratio of 0.39. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of TEL (0.39) is worse than 61.29% of its industry peers.
Although TEL does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.39 | ||
| Debt/FCF | 1.98 | ||
| Altman-Z | 4.9 |
ROIC/WACC1.91
WACC7.09%
2.3 Liquidity
TEL has a Current Ratio of 1.52. This is a normal value and indicates that TEL is financially healthy and should not expect problems in meeting its short term obligations.
TEL has a Current ratio of 1.52. This is in the lower half of the industry: TEL underperforms 70.97% of its industry peers.
A Quick Ratio of 0.96 indicates that TEL may have some problems paying its short term obligations.
TEL has a worse Quick ratio (0.96) than 79.84% of its industry peers.
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 | 1.52 | ||
| Quick Ratio | 0.96 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.91% over the past year.
The Earnings Per Share has been growing slightly by 6.41% on average over the past years.
TEL shows a small growth in Revenue. In the last year, the Revenue has grown by 4.86%.
TEL shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.33% yearly.
EPS 1Y (TTM)11.91%
EPS 3Y5.06%
EPS 5Y6.41%
EPS Q2Q%18.85%
Revenue 1Y (TTM)4.86%
Revenue growth 3Y2.02%
Revenue growth 5Y3.33%
Sales Q2Q%13.95%
3.2 Future
TEL is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.06% yearly.
The Revenue is expected to grow by 5.97% on average over the next years.
EPS Next Y9.85%
EPS Next 2Y9.64%
EPS Next 3Y9.89%
EPS Next 5Y9.06%
Revenue Next Year7.79%
Revenue Next 2Y8.03%
Revenue Next 3Y7.33%
Revenue Next 5Y5.97%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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 25.03, which means the current valuation is very expensive for TEL.
Compared to the rest of the industry, the Price/Earnings ratio of TEL indicates a somewhat cheap valuation: TEL is cheaper than 71.77% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.93, TEL is valued at the same level.
Based on the Price/Forward Earnings ratio of 22.77, the valuation of TEL can be described as rather expensive.
Based on the Price/Forward Earnings ratio, TEL is valued a bit cheaper than the industry average as 66.13% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 35.31, TEL is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.03 | ||
| Fwd PE | 22.77 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, TEL is valued a bit cheaper than 69.35% of the companies in the same industry.
79.03% 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 | 21.22 | ||
| EV/EBITDA | 16.39 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of TEL may justify a higher PE ratio.
PEG (NY)2.54
PEG (5Y)3.9
EPS Next 2Y9.64%
EPS Next 3Y9.89%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.42%, TEL has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.64, TEL pays a better dividend. On top of this TEL pays more dividend than 90.32% of the companies listed in the same industry.
With a Dividend Yield of 1.42, TEL pays less dividend than the S&P500 average, which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.42% |
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 its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)6.79%
Div Incr Years14
Div Non Decr Years17
5.3 Sustainability
TEL pays out 54.30% of its income as dividend. This is a bit on the high side, but may be sustainable.
TEL's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP54.3%
EPS Next 2Y9.64%
EPS Next 3Y9.89%
206.97
+0.68 (+0.33%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryElectronic Equipment, Instruments & Components
Earnings (Last)
Earnings (Next)
Inst Owners94.76%
Inst Owner Change-1.5%
Ins Owners0.12%
Ins Owner Change-0.37%
Market Cap61.16B
Analysts79.13
Price Target218.16 (5.41%)
Short Float %1.31%
Short Ratio2.13
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.42% |
Yearly Dividend2.48
Dividend Growth(5Y)6.79%
DP54.3%
Div Incr Years14
Div Non Decr Years17
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)7.16%
Min EPS beat(2)5.89%
Max EPS beat(2)8.43%
EPS beat(4)3
Avg EPS beat(4)3.94%
Min EPS beat(4)-0.77%
Max EPS beat(4)8.43%
EPS beat(8)7
Avg EPS beat(8)3.12%
EPS beat(12)10
Avg EPS beat(12)2.84%
EPS beat(16)14
Avg EPS beat(16)3.46%
Revenue beat(2)2
Avg Revenue beat(2)3.68%
Min Revenue beat(2)3.34%
Max Revenue beat(2)4.01%
Revenue beat(4)3
Avg Revenue beat(4)1.22%
Min Revenue beat(4)-2.74%
Max Revenue beat(4)4.01%
Revenue beat(8)3
Avg Revenue beat(8)0%
Revenue beat(12)6
Avg Revenue beat(12)0.53%
Revenue beat(16)10
Avg Revenue beat(16)1.01%
PT rev (1m)28.27%
PT rev (3m)30.61%
EPS NQ rev (1m)8.36%
EPS NQ rev (3m)7.19%
EPS NY rev (1m)0%
EPS NY rev (3m)2.2%
Revenue NQ rev (1m)4.18%
Revenue NQ rev (3m)7.74%
Revenue NY rev (1m)2.06%
Revenue NY rev (3m)2.09%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.03 | ||
| Fwd PE | 22.77 | ||
| P/S | 3.69 | ||
| P/FCF | 21.22 | ||
| P/OCF | 16.26 | ||
| P/B | 4.94 | ||
| P/tB | 21.5 | ||
| EV/EBITDA | 16.39 |
EPS(TTM)8.27
EY4%
EPS(NY)9.09
Fwd EY4.39%
FCF(TTM)9.75
FCFY4.71%
OCF(TTM)12.73
OCFY6.15%
SpS56.12
BVpS41.9
TBVpS9.63
PEG (NY)2.54
PEG (5Y)3.9
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.85% | ||
| ROE | 11.75% | ||
| ROCE | 16.1% | ||
| ROIC | 13.51% | ||
| ROICexc | 13.99% | ||
| ROICexgc | 27.78% | ||
| OM | 19.3% | ||
| PM (TTM) | 8.78% | ||
| GM | 34.99% | ||
| FCFM | 17.38% |
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-Score6
Asset Turnover0.67
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.39 | ||
| Debt/FCF | 1.98 | ||
| Debt/EBITDA | 1.2 | ||
| Cap/Depr | 106.3% | ||
| Cap/Sales | 5.3% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 93.39% | ||
| Profit Quality | 198.08% | ||
| Current Ratio | 1.52 | ||
| Quick Ratio | 0.96 | ||
| Altman-Z | 4.9 |
F-Score6
WACC7.09%
ROIC/WACC1.91
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)11.91%
EPS 3Y5.06%
EPS 5Y6.41%
EPS Q2Q%18.85%
EPS Next Y9.85%
EPS Next 2Y9.64%
EPS Next 3Y9.89%
EPS Next 5Y9.06%
Revenue 1Y (TTM)4.86%
Revenue growth 3Y2.02%
Revenue growth 5Y3.33%
Sales Q2Q%13.95%
Revenue Next Year7.79%
Revenue Next 2Y8.03%
Revenue Next 3Y7.33%
Revenue Next 5Y5.97%
EBIT growth 1Y9.33%
EBIT growth 3Y3.4%
EBIT growth 5Y5.71%
EBIT Next Year39.63%
EBIT Next 3Y18.24%
EBIT Next 5Y11.5%
FCF growth 1Y31.72%
FCF growth 3Y12.09%
FCF growth 5Y10.83%
OCF growth 1Y27.98%
OCF growth 3Y9.12%
OCF growth 5Y7.5%