It has been about a month since the last earnings report for TE Connectivity (TEL). Shares have added about 0.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TE Connectivity due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for TE Connectivity Ltd. before we dive into how investors and analysts have reacted as of late.
TEL Q1 Earnings Beat Estimates, Revenues Up Y/Y
TE Connectivity 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’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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 5.24% due to these changes.
VGM Scores
At this time, TE Connectivity has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise TE Connectivity has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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TE Connectivity Ltd. (TEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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