TEL Q1 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall

TE Connectivity TEL reported first-quarter fiscal 2026 adjusted earnings of $2.72 per share, which increased 39.5% from the year-ago quarter and beat the Zacks Consensus Estimate by 7.09%.

Net sales totaled $4.67 billion, which beat the consensus estimate by 3.62% and increased 22% reported and 15% organically year over year. The surge was driven by growth in both the Industrial and Transportation segments. Orders increased in both segments to $5.1 billion, up 28% year over year and 9% sequentially. Book-to-bill was 1.1 compared with 1.05 in the year-ago quarter.

TEL shares were down 0.65% at the time of writing this article.

TEL’s Q1 Top-Line Details

The Transportation solutions segment generated revenues of $2.47 billion, contributing 52.8% to net sales. The figure increased 10% year over year on a reported basis and 7% organically.

Automotive sales increased 7% year over year on a reported basis and 7% organically, supported by strong content growth in Asia and Europe. Commercial transportation sales rose 16% year over year and 19% organically, driven primarily by growth in Asia and Europe. Sensor sales inched up 1% year over year but declined 2% organically.

The Industrial Solutions segment generated revenues of $2.20 billion, making up 52.8% of net sales. This represented a 38% increase year over year on a reported basis and 26% growth organically. Reportedly, Digital Data Networks, Automation & Connected Living, Energy, Aerospace, Defense and Marine and Medical reflected year-over-year growth of 71%, 15%, 88%, 14% and 5%, respectively.

TEL’s Q1 Operating Details

In first-quarter fiscal 2026, GAAP gross margin expanded 180 basis points (bps) year over year to 37.2%.

Selling, general, and administrative expenses, as a percentage of net sales, increased 40 bps to 11.5%. Research, development, and engineering expenses were down 10 bps to 4.8% of net sales.

Adjusted operating margin expanded 180 bps year over year to 22.2% in the reported quarter.

TEL’s Balance Sheet & Cash Flow

As of Dec. 26, 2025, cash and cash equivalents were $1.25 billion, up from $1.26 billion as of Sept. 26, 2025.

Long-term debt was $4.86 billion as of Dec. 26, 2025, compared with $4.84 billion as of Sept. 26, 2025.

TE Connectivity generated $865 million in cash from operations in the reported quarter, down from the previous quarter's figure of $1.4 billion.

TEL generated a free cash flow of $608 million in the first quarter, up from $1.2 billion reported in the previous quarter.

TE Connectivity Offers Positive 2Q26 Guidance

TE Connectivity expects fiscal second-quarter net sales to increase 13% year over year and 6% organically year over year to $4.7 billion. Adjusted earnings are projected to be $2.65 per share, indicating growth of 20% year over year.

Zacks Rank & Other Stocks to Consider

Currently, TE Connectivity has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Computer and Technology sector are KLA KLAC, Sandisk SNDK and Teradata TDC. Each of the three stocks sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Both KLA and Sandisk are set to report their respective second-quarter fiscal 2026 results on January 29. Teradata is set to report its fourth-quarter 2025 results on February 10.

In the trailing six-month period, shares of Sandisk, KLA and Teradata jumped 1025.7%, 69% and 34.1%, respectively.

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This article originally published on Zacks Investment Research (zacks.com).

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