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TE Connectivity TEL reported third-quarter fiscal 2025 adjusted earnings of $2.27 per share, which increased 18.8% from the year-ago quarter and beat the Zacks Consensus Estimate by 9.13%.
Net sales totaled $4.53 billion, beating the consensus estimate by 5.2%, which increased 14% reported and 9% organically year over year. Sales were favorably impacted by growth in the Industrial segment.
Orders of $4.5 billion increased 6% both year over year and sequentially.
Following the release, TEL shares rose 14.13% in the pre-market trading, driven by strong operational performance and records in sales and cash flow. Year to date, shares of the company have climbed 26.2%, outpacing the Zacks Computer and Technology sector’s 9.8% return.
TE Connectivity Ltd. price-consensus-eps-surprise-chart | TE Connectivity Ltd. Quote
The Transportation solutions segment generated revenues of $2.42 billion, contributing 53.3% to net sales. The figure increased 2.8% year over year on a reported basis and 1.1% organically.
Automotive sales increased 3.3% year over year, including 1.5% organic growth, supported by strong content-driven demand in Asia.
Sensor sales fell 1.7% year over year, reflecting soft demand across Western end markets.
Commercial transportation sales rose 3.9% year over year, driven primarily by growth in Asia and Europe.
The Industrial Solutions segment generated revenues of $2.12 billion, making up 46.7% of net sales. This represented a 30% increase year over year on a reported basis and 20.5% growth organically.
Digital Data Networks, Automation & Connected Living, Aerospace, Defense and Marine, and Energy saw year-over-year growth of 84.2%, 10%, 8.4% and 69.9%, respectively. However, Medical experienced a decline of 13.4%.
In third-quarter fiscal 2025, GAAP gross margin expanded 50 basis points (bps) year over year to 35.3%.
Selling, general and administrative expenses held flat at 10.8% of net sales, unchanged year over year.
Research, development and engineering expenses, as a percentage of net sales, contracted 10 bps to 4.7%.
Adjusted operating margin expanded 60 bps year over year to 19.9% in the reported quarter.
As of June 27, 2025, cash and cash equivalents were $0.67 billion, down from $2.55 billion as of March 28, 2025.
Long-term debt was $4.85 billion as of June 27, 2025, compared with $3.26 billion as of March 28, 2025.
TE Connectivity generated $1.2 billion in cash from operations in the reported quarter, up from the previous quarter's figure of $0.7 billion.
TEL generated a free cash flow of $962 million in the third quarter, up from $424 million reported in the previous quarter.
TE Connectivity expects fiscal fourth-quarter net sales to increase 12% year over year to $4.55 billion. Adjusted earnings are projected to be $2.27 per share, indicating growth of 16% year over year.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025’s sales is pegged at $4.38 billion, suggesting 7.68% growth over the figure reported in the year-ago quarter. The consensus mark for earnings is pegged at $2.13 per share, up by a penny over the past 30 days and indicates 9.23% growth over the figure reported in the year-ago quarter.
Currently, TE Connectivity has a Zacks Rank #2 (Buy).
CommVault Systems CVLT, Microchip Technology MCHP and KLA Corporation KLAC are some other stocks that investors can consider in the broader Zacks Computer and Technology sector. While CommVault Systems and Microchip Technology currently sport a Zacks Rank #1 (Strong Buy) each, KLA Corp carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
CommVault Systems shares have gained 10.6% year to date. CVLT is set to report its first-quarter fiscal 2026 results on July 29.
Microchip Technology shares have appreciated 31.2% year to date. MCHP is set to report its first-quarter fiscal 2026 results on Aug. 7.
KLA Corp shares have jumped 41.6% year to date. KLAC is set to report its fourth-quarter fiscal 2025 results on July 31.
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This article originally published on Zacks Investment Research (zacks.com).
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