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TE Connectivity (TEL) to Post Q3 Earnings: What's in Store?

Zacks Equity Research

TE Connectivity Ltd. TEL is set to report fiscal third-quarter 2019 results on Jul 24.

The company surpassed the Zacks Consensus Estimate in the trailing four quarters, with the average being 4.82%.

TE Connectivity, which came up with fiscal second-quarter adjusted earnings of $1.42 per share, delivered a positive surprise of 11.81% during the quarter.

For the fiscal third quarter, the company expects adjusted earnings in the band of $1.41-$1.45per share. The Zacks Consensus Estimate for earnings is pegged at $1.43 per share.

The company anticipates net sales in the range of $3.4-$3.5 billion. The Zacks Consensus Estimate for the same is pegged at $3.46 billion.

Currency headwinds are expected to negatively impact its top and bottom lines in fiscal third-quarter 2019. Also, weak market conditions in China and softness in European Auto may impact results.

Let’s see how things are shaping up prior to this announcement.

TE Connectivity Ltd. Price and EPS Surprise

 

TE Connectivity Ltd. Price and EPS Surprise

TE Connectivity Ltd. price-eps-surprise | TE Connectivity Ltd. Quote

Factors to Consider

The company is witnessing normalizing seasonal trends in business, which remains a major positive. Markets like commercial transportation, factory automation and appliances are expected to continue normalizing. This is likely to benefit the to-be-reported quarter’s results.

The Communications Solutions segment is expected to be down by low-single digits owing to softness in Asia.

Meanwhile, the Transportation Solutions segment is anticipated to remain flat year over year. The segment is expected to benefit from the growing adoption of sensors in industrial and auto applications. Further, Content growth in automobile production remains a tailwind.

The Industrial Solutions segment is expected to be up by low-single digits, thanks to growing momentum across aerospace, defense and medical applications areas.

However, currency fluctuations remain a concern.

Nevertheless, the company’s strengthening global position is expected to benefit the appliance business.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

TE Connectivity has an Earnings ESP of -2.29% and carries a Zacks Rank #3, which makes surprise prediction difficult. Zacks Rank #4 or 5 (Sell rated) stocks are best avoided.

Stocks That Warrant a Look

You may consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank.

Amazon.com, Inc. AMZN has an Earnings ESP of +15.56% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Facebook, Inc. FB has an Earnings ESP of +0.61% and a Zacks Rank #2.

Thermo Fisher Scientific Inc. TMO has an Earnings ESP of +0.54% and holds a Zacks Rank #2.

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