TE Connectivity delivers 12% sales increase and over 20% EPS growth in fiscal fourth quarter

TE Connectivity reported fiscal 2026 sales of $19.9 billion, up 15% reported and 12% organically, with adjusted EPS rising 24% to $11.52; fourth-quarter adjusted EPS increased 21% to $3.14. Orders grew 27% for the year to $22.2 billion, and the company expects fiscal 2027 organic sales growth similar to 2026, with first-quarter sales up about 15% to $5.35 billion and adjusted EPS of $3.30, up 21%. It returned approximately $2.8 billion to shareholders and committed $1.6 billion to bolt-on acquisitions; management cited customer AI investment as a demand driver for Industrial Solutions, which grew 26% in 2026.

Analysis

TEL’s setup is better than the headline EPS comparison implies, but less diversified than the “data and power” framing suggests. FY25 GAAP EPS was depressed by a large tax valuation-allowance charge, so the 80% GAAP rebound is a poor run-rate signal; adjusted EPS growth is the cleaner read. Likewise, reported energy growth materially overstates underlying momentum: organic growth was far below reported growth, with acquisitions and currency contributing. By contrast, digital data networks’ very high organic growth is the clearest evidence of AI-related demand—and the main concentration risk.

The order acceleration and strong Q1 outlook support a 1–3 month estimate-revision path, but orders are not revenue until converted, and conversion can absorb working capital. Receivables and inventory already grew; monitor backlog conversion and cash flow, not orders alone. Over 6–18 months, optics and power-filtering acquisitions may broaden TEL’s content per data-center build, but integration and returns on the committed capital are unproven. Amphenol is a plausible competitive pressure point; sustained AI infrastructure demand benefits both, while pricing or share shifts could limit TEL’s capture.

Contrarian read: the broad AI/grid narrative may encourage investors to extrapolate a concentrated digital-network boom across the portfolio. Transportation growth is materially slower, and energy’s reported acceleration is not purely organic. The release is constructive, but not a reason to underwrite every segment at the digital-network growth rate.

Key Decisions for Investors

• Favor a staged long in TEL rather than chasing the initial earnings reaction: initiate only if the post-call discussion confirms continued digital-network demand and orders convert into sales; add on evidence of sustained organic growth and margin resilience. No price target without valuation and market-reaction data.
• For the next 1–3 months, track reported-versus-organic growth, backlog conversion, adjusted segment margins, and receivables/inventory relative to sales. Strong orders without revenue conversion or deteriorating cash conversion would weaken the thesis.
• Treat the $1.6B acquisition commitment as a catalyst to verify, not incremental earnings already earned. Reassess if management indicates integration drag, weaker organic growth in energy/industrial, or returns that do not justify the capital deployed.
• Falsifiers: a material cut to FY27 organic-growth expectations; digital-network growth decelerating alongside weaker orders; sustained margin contraction; or cash conversion worsening as working capital rises.