Why Investors Are Eyeing TE Connectivity Ltd (TEL): The Key Drivers of Market Outperformance and Growth Potential

Exploring the Financial and Competitive Strengths of TE Connectivity Ltd

TE Connectivity Ltd (TEL, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $143.79, TE Connectivity Ltd has witnessed a daily loss of 0.48%, marked against a three-month change of 23.46%. A thorough analysis, underlined by the GF Score, suggests that TE Connectivity Ltd is well-positioned for substantial growth in the near future.


What Is the GF Score?

The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.

Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. With high ranks in financial strength, profitability, and growth, but a moderate GF Value rank, GuruFocus assigned TE Connectivity Ltd the GF Score of 92 out of 100, which signals the highest outperformance potential.

Understanding TE Connectivity Ltd Business

TE Connectivity Ltd, with a market cap of $44.40 billion and sales of $16.02 billion, is the largest electrical connector supplier in the world, supplying interconnect and sensor solutions to the transportation, industrial, and communications markets. Operating in 150 countries and offering over 500,000 stock-keeping units, TE Connectivity Ltd's broad portfolio forms the electrical architecture of its end customers' cutting-edge innovations. The company's operating margin stands at a healthy 17.36%, reflecting its efficient management and strong market position.


Financial Strength Breakdown

According to the Financial Strength rating, TE Connectivity Ltd's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for TE Connectivity Ltd stands impressively at 36.13, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.26, TE Connectivity Ltd's strategic handling of debt solidifies its financial health.

Profitability Rank Breakdown

The Profitability Rank shows TE Connectivity Ltd's impressive standing among its peers in generating profit. TE Connectivity Ltd's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.

Growth Rank Breakdown

Ranked highly in Growth, TE Connectivity Ltd demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 11.3%, which outperforms better than 69.97% of 2321 companies in the Hardware industry. Moreover, TE Connectivity Ltd has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 36.9, and the rate over the past five years is 7.9. This trend accentuates the company's continued capability to drive growth.


Next Steps

Considering TE Connectivity Ltd's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking to capitalize on this opportunity should consider the company's solid track record and promising growth prospects. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.

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.