What's Driving TE Connectivity Ltd's Surprising 17% Stock Rally?

TE Connectivity Ltd (TEL, Financial) has experienced a notable uptick in its stock performance, with a market capitalization now standing at $41.85 billion. The current price of TEL's shares is $134.65, reflecting a 2.99% gain over the past week and a significant 16.55% gain over the past three months. According to the GF Value, the stock is currently fairly valued at $141.74, a slight decrease from the past GF Value of $144.37, which indicated the stock was modestly undervalued. This shift in valuation suggests that the stock's recent price movements have brought it closer to its intrinsic value as estimated by GuruFocus.

Introduction to TE Connectivity Ltd

TE Connectivity Ltd, a leader in the hardware industry, stands as the world's largest electrical connector supplier. The company's extensive reach includes a presence in 150 countries and a diverse portfolio of over 500,000 stock-keeping units. TE Connectivity's products are integral to the transportation, industrial, and communications markets, enabling the electrical architecture of various cutting-edge innovations. 1750175928585187328.png

Assessing TE Connectivity's Profitability

TE Connectivity boasts a high Profitability Rank of 9 out of 10, indicating robust financial health and a strong likelihood of maintaining its profitability. The company's operating margin stands at an impressive 16.70%, outperforming 89.88% of its peers in the industry. Furthermore, TE Connectivity's return on equity (ROE) is 17.03%, surpassing 86.84% of companies, while its return on assets (ROA) at 8.92% and return on invested capital (ROIC) at 13.33% also rank higher than the majority of its competitors. These figures underscore the company's efficiency in generating profits from its equity, assets, and invested capital. TE Connectivity has also maintained profitability for 9 out of the past 10 years, a testament to its consistent performance. 1750175948411662336.png

TE Connectivity's Growth Trajectory

The company's Growth Rank is equally impressive at 9 out of 10, reflecting its strong revenue and earnings expansion. TE Connectivity's 3-year revenue growth rate per share is 11.30%, outpacing 70.01% of its industry counterparts. Its 5-year revenue growth rate per share also stands strong at 6.30%. Looking ahead, the estimated total revenue growth rate for the next 3 to 5 years is 3.74%, which is more favorable than 40.39% of companies. The 3-year EPS without NRI growth rate is a remarkable 54.10%, and the future 3 to 5-year estimated EPS growth rate is projected at 11.00%, both of which are higher than the industry median. These growth metrics highlight TE Connectivity's potential for continued expansion and profitability. 1750175966610747392.png

Significant Shareholders in TE Connectivity

TE Connectivity's shareholder base includes notable investment firms, with Dodge & Cox holding the largest share at 5.08%, amounting to 15,858,194 shares. First Pacific Advisors (Trades, Portfolio) follows with a 0.87% stake, holding 2,728,516 shares, and Richard Pzena (Trades, Portfolio) owns 0.76% with 2,356,614 shares. The confidence of these major holders in TE Connectivity's stock underscores the company's strong market position and potential for future growth.

Competitive Landscape

When compared to its competitors, TE Connectivity holds a solid position in the market. Amphenol Corp (APH, Financial), with a market cap of $58.6 billion, leads the pack, followed by Corning Inc (GLW, Financial) at $25.85 billion, and Jabil Inc (JBL, Financial) at $15.71 billion. TE Connectivity's market cap of $41.85 billion places it comfortably within this competitive landscape, reflecting its significant role in the hardware industry.


In summary, TE Connectivity Ltd's recent stock performance has been robust, with a 16.55% gain over the past three months and a current valuation that is fairly aligned with its GF Value. The company's strong profitability and growth metrics, coupled with the significant investments from major holders, paint a positive picture for its future prospects. When juxtaposed with its competitors, TE Connectivity's market position remains strong, suggesting that the company is well-equipped to maintain its status as a leading supplier in the electrical connector industry.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.


I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.