- Novembre 10, 2022
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
Now we’ll turn from financial services to tech, where TE Connectivity works on the hardware side. The company designs and manufactures sensors and connectors for a variety of industries, including data communications, 5G networking, aerospace defense, automotive, industrial equipment and tools, consumer electronics, and smart homes. TE boasts of a major footprint in the tech world, with $675 million cumulatively invested in R&D work, over 247 billion individual products manufactured annually, and more than $16.3 billion in total sales for fiscal year 2022. This is a company that has clearly found profit in the digital world.
Early this month, TE announced its financial results from fourth quarter of its 2022 fiscal year, which ended on September 30. The company reported a 14% year-over-year increase in quarterly revenues, to $4.4 billion, and an 11% increase in the GAAP diluted EPS, to $2.21 per share. In addition, TE showed company-record cash flows, with $944 million in cash from operating activities, and $745 million in free cash flow.
Looking at the full fiscal year of 2022, the total sales revenue of $16.3 billion was up 9% y/y, and the fiscal year’s adjusted EPS of $7.33 was up 13%. Annualized cash from operations was $2.5 billion, with $1.8 billion in free cash flow. TE returned $2.1 billion to shareholders during the fiscal year.
The capital return was accomplished through a combination of share repurchases and a modest dividend. In June of this year, the company’s Board approved increasing the repurchase authorization by $1.5 billion, and the fiscal Q1 dividend has been declared for 56 cents per common share, payable in March of next year. At the declared payment, the dividend annualizes to $2.24 per common share and give a yield of 2%, matching the average yield found among S&P-listed firms.
This tech company has attracted the attention of Goldman Sachs’ 5-star analyst Mark Delaney, who lays out just why he thinks TE will do well going forward: “We continue to see TE as well positioned for long-term growth given both its exposure to key secular growth markets (including EVs and charging/renewables), rising content per device (including about 2X the content on an EV vs. ICE vehicle), and its exposure to markets that are either relatively stable and/or cyclically below normalized levels (e.g. auto, A&D, and medical that in total are about half of its total revenue). Finally, TE’s FCF generation remains strong, allowing the company to return cash and augment growth via tuck-in M&A.”
To this end, Delaney rates TEL shares a Buy, and sets a price target of $160 to indicate his confidence in an upside of 38% going into next year.
Wall Street’s analysts like to follow tech firms, and TE has 10 recent reviews on file. These include 6 Buy ratings and 4 Holds (i.e. Neutral), for a Moderate Buy consensus rating. Shares are priced at $115.46 and the $134.50 average price target suggests ~16% one-year upside potential.