TE Connectivity Stock Rises on Q3 Earnings Beat, Revenues Up Y/Y

Core Insights - TE Connectivity (TEL) reported third-quarter fiscal 2025 adjusted earnings of $2.27 per share, an increase of 18.8% year over year, surpassing the Zacks Consensus Estimate by 9.13% [1] - Net sales reached $4.53 billion, exceeding the consensus estimate by 5.2%, with a year-over-year increase of 14% reported and 9% organically, driven by growth in the Industrial segment [1][8] - Orders totaled $4.5 billion, reflecting a 6% increase both year over year and sequentially [1] Financial Performance - The Transportation solutions segment generated revenues of $2.42 billion, accounting for 53.3% of net sales, with a year-over-year increase of 2.8% reported and 1.1% organically [3] - Automotive sales rose by 3.3% year over year, supported by strong demand in Asia, while sensor sales declined by 1.7% due to soft demand in Western markets [3] - The Industrial Solutions segment reported revenues of $2.12 billion, representing 46.7% of net sales, with a significant year-over-year increase of 30% reported and 20.5% organically [4] Segment Growth - Digital Data Networks, Automation & Connected Living, Aerospace, Defense and Marine, and Energy segments experienced year-over-year growth of 84.2%, 10%, 8.4%, and 69.9%, respectively, while the Medical segment saw a decline of 13.4% [5] Operating Metrics - GAAP gross margin expanded by 50 basis points year over year to 35.3%, while adjusted operating margin increased by 60 basis points to 19.9% [6] - Selling, general and administrative expenses remained flat at 10.8% of net sales, and research, development, and engineering expenses contracted by 10 basis points to 4.7% [6] Balance Sheet and Cash Flow - As of June 27, 2025, cash and cash equivalents were $0.67 billion, down from $2.55 billion as of March 28, 2025, while long-term debt increased to $4.85 billion from $3.26 billion [7] - TE Connectivity generated $1.2 billion in cash from operations in the reported quarter, up from $0.7 billion in the previous quarter, and reported free cash flow of $962 million, an increase from $424 million [7][9] Future Guidance - TE Connectivity anticipates fiscal fourth-quarter net sales to rise by 12% year over year to $4.55 billion, with adjusted earnings projected at $2.27 per share, indicating a growth of 16% year over year [10] - The Zacks Consensus Estimate for fourth-quarter sales is $4.38 billion, suggesting a growth of 7.68% year over year, while the consensus for earnings is $2.13 per share, reflecting a 9.23% increase [11]