TE Connectivity Ltd.

(New York Stock Exchange)
Back to all articles
Somewhat Bullish +50

Is TE Connectivity (TEL) a Solid Growth Stock? 3 Reasons to Think "Yes"

AI-generated analysis

πŸ“ˆ TE Connectivity (TEL) is recommended by the Zacks Growth Style Score system as a solid growth stock with a favorable score and top Zacks Rank.

πŸ’° The company's projected earnings per share (EPS) growth of 28.8% this year significantly exceeds both its historical average of 7.8% and the industry average of 20%.

πŸ“Š TE Connectivity demonstrates superior asset utilization with a sales-to-total-assets ratio of 0.74, outperforming the industry average of 0.72 in generating revenue from assets.

πŸ“ˆ Sales growth for the company is expected to reach 13.1% this year, contrasting sharply with an industry average forecast of only 0.6%.

πŸ‘ Analyst consensus estimates for TE Connectivity have shown a positive upward trend, rising 1.8% over the past month.

πŸ† Based on these metrics, Zacks assigns TEL a Growth Score of B and a Zacks Rank #2 (Buy) designation.

πŸ“‰ Historical data indicates that stocks with strong growth scores combined with Buy or Strong Buy ranks consistently outperform the broader market.

πŸ” The analysis highlights earnings growth and asset efficiency as key factors distinguishing TE Connectivity from its peers in the electronics sector.

πŸ“œ Upward revisions in earnings estimates for TEL are noted to have a strong correlation with potential near-term stock price movements.

πŸš€ Growth investors may consider TE Connectivity a promising opportunity given its combination of high projected returns and positive analyst sentiment.

Bullish Signals
  • TE Connectivity is recommended by the proprietary Zacks system due to its favorable Growth Score and top Zacks Rank.
  • The company's EPS is expected to grow 28.8% this year, significantly crushing the industry average of 20%.
  • TE Connectivity boasts a superior asset utilization ratio (S/TA) of 0.74 compared to the industry average of 0.72, demonstrating more efficient use of assets.
  • Projected sales growth for TE Connectivity stands at 13.1%, far exceeding the meager 0.6% industry average.
  • There have been positive upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate surging 1.8% over the past month.
Risk Factors
  • The analysis explicitly states that growth stocks carry above-average risk by their very nature and exhibit volatility.
  • Investors face the specific danger of losing money on a stock whose growth story is actually over or nearing its end.
  • The company carries a Zacks Rank #2 (Buy) rather than a top-tier Zacks Rank #1 (Strong Buy), which may indicate moderate potential rather than maximum confidence from the proprietary system.
Full Analysis
TE Connectivity (TEL) is recommended as a solid growth stock based on its strong performance metrics within the Zacks Style Scores system. The article highlights that while growth stocks carry higher risk and volatility, the Zacks Growth Score provides a proprietary analysis to identify companies with genuine future potential rather than just traditional attributes. TEL currently holds a favorable Growth Score of B and a top-tier Zacks Rank #2 (Buy) status, a combination statistically associated with outperformance relative to the broader market. The primary driver for this recommendation is the company's robust earnings growth projection. Although the historical EPS growth rate stands at 7.8%, analysts project a significant surge of 28.8% for the current year, which substantially exceeds the industry average of 20%. This anticipated acceleration suggests strong business fundamentals and future stock price gains. Additionally, the article points to superior asset utilization, noting that TEL's sales-to-total-assets ratio is 0.74 compared to an industry average of 0.72, indicating the company generates more revenue per dollar of assets than its peers. Sales growth further validates TEL as an attractive investment opportunity with a projected increase of 13.1% this year, vastly outpacing the industry average of just 0.6%. This expansion is corroborated by positive trends in earnings estimate revisions; specifically, the Zacks Consensus Estimate for current-year earnings has increased by 1.8% over the past month. Historically, upward revisions in earnings estimates correlate strongly with near-term stock price appreciation. The article concludes that this combination of efficient asset use, high projected sales and earnings growth, and positive analyst sentiment positions TEL well for continued outperformance.