TEL to Report Q3 Earnings: Here's Why the Stock is a Buy Right Now

TE Connectivity (TEL) anticipates fiscal Q3 2025 adjusted earnings of approximately $2.06 per share and net sales of $4.30 billion, representing 8% and 5% organic year-over-year growth, respectively, generally in line with consensus estimates. Key drivers include robust order volumes, strong demand in Asian EV/hybrid automotive markets, and growth from AI applications within the Industrial segment. These tailwinds are partially offset by automotive and broader industrial weakness in Europe and North America. The company's localized manufacturing is expected to mitigate tariff impacts, and with a positive Earnings ESP and Zacks Rank #2, TEL is poised for a potential earnings beat.

Analysis

TE Connectivity (TEL) is poised for a solid fiscal third-quarter 2025, with company guidance projecting adjusted EPS of approximately $2.06 (8% year-over-year growth) and net sales around $4.30 billion (5% organic YoY growth), figures that are closely aligned with consensus estimates. The company's performance is driven by a bifurcated market environment. Key tailwinds include robust order volumes, which grew 6% YoY and sequentially to over $4.25 billion in the prior quarter, and significant strength in the Asian automotive market, where TEL benefits from a 2x content-per-vehicle advantage in EVs compared to internal combustion engines. Further support comes from high-demand industrial sub-segments like AI applications, Energy, and Aerospace. However, these strengths are tempered by notable headwinds, including automotive and general industrial market weakness in Europe and North America, a sluggish Commercial Transportation business, and an expectation that global content growth will be at the low end of its 4-6% range. Despite concerns over tariffs, the company's localized manufacturing footprint is positioned to mitigate margin impact. The combination of a positive Earnings ESP of +4.26%, a Zacks Rank #2 (Buy), and a history of beating earnings estimates in three of the last four quarters suggests a high probability of a positive earnings surprise.

Key Decisions for Investors

• Given the strong order momentum, strategic positioning in high-growth EV and AI markets, and quantitative models suggesting an earnings beat, investors may find the current outlook supportive of a bullish stance.
• Investors should closely monitor management's commentary on the performance of European and North American segments, as any further deterioration could cap upside potential even with a positive earnings report.
• Pay close attention to the updated full-year guidance post-announcement, specifically focusing on whether strength in Asia and industrial AI applications can continue to outpace the cyclical weakness in other regions and the Commercial Transportation business.