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TE Connectivity Bumps Up Dividend & Increases Share Buyback

TE Connectivity Ltd. TEL recently announced a hike in dividend along with an increase in its share repurchase program.

This time around, the company approved an increase in its quarterly dividend by a couple of cents to 46 cents per share. This translates into a 4.5% increase from the prior dividend of 44 cents.

In addition, TE Connectivity authorized an increase in its share repurchase program by an additional $1.5 billion.

Impressive Fundamentals Drive Growth

TE Connectivity topped the Zacks Consensus Estimate in all the trailing four quarters, with average of 5.57%.

In the last reported quarter, the company reported non-GAAP earnings of $1.35 per share, which surged 19.5% on a year-over-year basis.

Further, revenues increased 1.5% year over year to $3.51 billion. The top-line growth was driven by solid segmental performance, especially in the Industrial and Communications segments.

TE Connectivity’s strong efforts toward business development will continue to boost segmental performance.

Moreover, aggressive share buyback will fuel its bottom line. For the fiscal first quarter of 2019, the company expects non-GAAP earnings within $1.25-$1.29 per share. Non-GAAP revenues are projected in the range of $3.33-$3.43 billion, reflecting growth of 3% at mid-point.

Cash Flow Generation Remains Strong

We believe that TE Connectivity’s strong balance sheet and cash flow generating ability will support its shareholder-friendly initiatives.

Cash and cash equivalents, short-term investments, along with restricted cash and investment balance totaled $848 million in fourth-quarter fiscal 2018.

Moreover, TE Connectivity generated free cash flow of $922 million in the last reported quarter, up 10% from the year-ago quarter. Further, the company paid back $1.6 billion to its shareholders through share repurchases and dividend payments, and used $153 million for acquisitions.

TE Connectivity Ltd. Price and Consensus

 

TE Connectivity Ltd. Price and Consensus | TE Connectivity Ltd. Quote

Zacks Rank & Stocks to Consider

TE Connectivity currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include AMETEK, Inc. AME, QuinStreet, Inc. QNST and Stamps.com Inc. STMP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for AMETEK, QuinStreet and Stamps.com is currently pegged at 11.18%, 25% and 15%, respectively.

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