Earnings Beat: TE Connectivity Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Investors in TE Connectivity Ltd. (NYSE:TEL) had a good week, as its shares rose 9.0% to close at US$144 following the release of its first-quarter results. Revenues were US$3.8b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$5.76, an impressive 248% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TE Connectivity after the latest results.
View our latest analysis for TE Connectivity
Following last week's earnings report, TE Connectivity's 18 analysts are forecasting 2024 revenues to be US$16.1b, approximately in line with the last 12 months. Statutory per share are forecast to be US$10.65, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$16.4b and earnings per share (EPS) of US$7.17 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.
The consensus price target was unchanged at US$157, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values TE Connectivity at US$175 per share, while the most bearish prices it at US$135. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that TE Connectivity's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.8% growth on an annualised basis. This is compared to a historical growth rate of 5.3% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than TE Connectivity.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards TE Connectivity following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that TE Connectivity's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple TE Connectivity analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - TE Connectivity has 1 warning sign we think you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
