TE Connectivity Ltd. TEL is scheduled to report its third-quarter fiscal 2023 results on Jul 26.
For the fiscal third quarter, TEL expects net sales of $4 billion, down 3% year over year on a reported basis but growing 2% on an organic basis.
The Zacks Consensus Estimate for revenues is pegged at $4.01 billion, suggesting a decline of 2.06% from the year-ago fiscal quarter’s reported figure.
TE Connectivity expects adjusted earnings of $1.65 per share. The Zacks Consensus Estimate is pegged at $1.66, unchanged over the past year but indicating a fall of 10.75% from the year-ago quarter’s reported figure.
The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 3.48%.
Let’s see how things are shaping up for TE Connectivity prior to this announcement.
TE Connectivity Ltd. Price and EPS Surprise
TE Connectivity Ltd. price-eps-surprise | TE Connectivity Ltd. Quote
Key Factors to Note
The solid execution of TE Connectivity’s strategies, especially price increases and content outperformance through electric vehicles (EV), is expected to have been the key catalysts in the fiscal third quarter.
TEL’s global manufacturing strategy is anticipated to have benefited its performance in the to-be-reported quarter.
Organic growth in the Energy segment, driven by a broad renewable applications portfolio, wind or solar, is expected to continue. The impact of acquisitions and divestitures is likely to have expanded expected margins sequentially for the Industrial segment.
All these factors are anticipated to have impacted the Industrial segment in the quarter under review. Our model estimate for industrial solutions sales is pegged at $1.17 billion, implying growth of 3.1% from the year-ago quarter’s reported figure.
A strong global position in the EV market, subjected to design wins and high voltage connectivity products, is likely to reflect positively in the Transportation segment. Increased stability in supply chain transportation is expected to have exponentially increased the growth of orders. Pricing actions implemented to offset inflationary impacts are likely to have driven margin expansion in the segment.
However, sluggishness in sensor and commercial transportation businesses is expected to have impacted the segment negatively. Also, the weakening momentum in China is likely to have been a concern.
Our model estimate for Transportation segment sales is pegged at $2.28 billion, suggesting a 0.8% decline from the year-ago quarter’s reported figure.
Coming to the Communication segment, market weakness and inventory corrections are expected to have impacted both the appliance and data and devices market negatively.
Our model estimate for Communication segment sales is pegged at $552.7 million, indicating a decline of 16.6% from the year-ago quarter’s reported figure.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
TE Connectivity has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
Tyler Technologies TYL has an Earnings ESP of +0.54% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tyler shares have gained 25.3% year to date. TYL is set to report its second-quarter 2023 results on Jul 27.
Cadence Design Systems CDNS has an Earnings ESP of +3.55% and a Zacks Rank #1.
Cadence Design shares have gained 48.6% year to date. CDNS is set to report its second-quarter 2023 results on Jul 24.
Meta Platforms META has an Earnings ESP of +5.83% and has a Zacks Rank of 2, at present.
Meta shares have gained 151.3% year to date. META is set to report its second-quarter 2023 results on Jul 26.
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