TE Connectivity to Report Q1 Earnings: Buy, Sell or Hold the Stock?

Core Viewpoint - TE Connectivity (TEL) is expected to report its first-quarter fiscal 2025 earnings on January 22, with anticipated adjusted earnings of approximately $1.88 per share, reflecting a 2% year-over-year growth despite tax-related headwinds [1][2]. Earnings Estimates - The Zacks Consensus Estimate for TEL's earnings is $1.89 per share, indicating a 2.72% growth compared to the previous year [2]. - TEL has beaten the Zacks Consensus Estimate for earnings in three of the last four quarters, with an average surprise of 2.83% [3]. Sales Expectations - TEL expects first-quarter sales to be around $3.9 billion, suggesting a 2% year-over-year growth, while the consensus estimate is slightly higher at $3.91 billion, indicating a 2.09% growth [4]. - The Transportation segment sales are estimated at $2.337 billion, reflecting a 1.5% year-over-year decline, while Industrial Solutions sales are expected to grow by approximately 2% to $1.045 billion [7]. Growth Drivers - Increased demand for TEL's solutions in Artificial Intelligence (AI) applications is anticipated to drive top-line growth, particularly in Communications Solutions [5]. - The Industrial Solutions segment is expected to benefit from improving Commercial Aerospace and Defense markets, as well as strength in renewable applications [5]. - The Transportation segment's growth is supported by TEL's strong position in hybrid and electric vehicles, although there is ongoing weakness in Commercial Transportation and Sensors due to sluggish industrial application markets [6]. Stock Performance - Since the last earnings report on October 30, 2024, TEL's shares have declined by 4%, outperforming the Zacks Electronics Miscellaneous Components industry but underperforming the broader Zacks Computer & Technology sector [10]. - The near-term share price movement is expected to remain muted due to macroeconomic challenges in the Transportation Solutions segment, but long-term growth prospects are promising due to rising demand for AI solutions [11].