We're moving "PO from $63 to $70. Our sensitivity analysis suggests that margins in the transportation segment are likely to show further expansion. Despite the multiple rerating higher, TEL still trades at 14x C15 EPS with solid cash flows and an increasing dividend," the bank said in a note.
"We are upgrading...the... shares... given Auto recovery in Europe (highest content region), Commercial transportation headwinds not enough to derail transportation segment margins, Restructuring benefits ($100mn+ or $0.18/share) should drive margin improvement in Networks, Consumer segments, Metals tailwinds will drive $60mn+ ($0.11/share) of margin improvement, Strong FCF, significant share repurchases, and continued dividend increases, and Scope for portfolio optimization," the bank added.
TheStreet Ratings team rates TE CONNECTIVITY LTD as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TE CONNECTIVITY LTD (TEL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TEL's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 6.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, TE CONNECTIVITY LTD's return on equity exceeds that of both the industry average and the S&P 500.
- 38.06% is the gross profit margin for TE CONNECTIVITY LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.61% is above that of the industry average.
- Powered by its strong earnings growth of 30.76% and other important driving factors, this stock has surged by 48.68% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TEL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- You can view the full analysis from the report here: TEL Ratings Report