TE Connectivity plc TEL
Verdict: Sell. Fair value $200 against a price of $231 on 6 Jan 2026, 13% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Industry tailwinds with growing market.
The case against: Macro headwinds could impact growth. Valuation multiple compression risk.
Main risks
- Significant Net Income Decline: Net income fell ~42% from 2024 to 2025 ($3.19B to $1.84B), causing a sharp drop in net margin and ROE, which requires urgent investigation.
- Stagnant Revenue Growth: Despite a recent uptick, the 3-year revenue CAGR is a low 2.0%, indicating potential market maturity or cyclical headwinds.
- Divergence of Earnings and Cash Flow: The sharp drop in Net Income contrasts starkly with the strong growth in Free Cash Flow, suggesting significant non-cash charges or accounting adjustments may be impacting reported earnings.
- Valuation prices in optimistic scenario (limited margin for error)
- Sentiment trend deteriorating
- Market volatility