Security Analysis

Security Analysis

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Security Analysis
TE Connectivity (TEL)
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TE Connectivity (TEL)

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Value Stock Geek
Jun 09, 2024
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Security Analysis
Security Analysis
TE Connectivity (TEL)
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white and black car on brown sand during daytime
Photo by Mateo Giraud on Unsplash

Key Statistics

EV/EBIT = 18.35x

ROE = 29.2%

Debt/Equity = 34%

FCF Yield = 6.75%

Dividend Yield = 1.74%

Market Cap = $45.78 billion

The Company

TE Connectivity (TEL), a Swiss-domiciled company, specializes in designing and manufacturing connectors and sensors for three industries: transportation, industrial, and communications.

It is a global firm which achieves 39% of its sales in the EMEA region, 32% in the Asia Paciific, and 29% in the Americas.

Over the past decade, TE Connectivity has been a top player in the global connector market, especially in the transportation sector, which brings in 60% of their revenue. As cars become more electronic and require new electrical components and systems, this is likely to remain a significant growth area for the company. Their products are known for high performance and reliability in tough conditions, and customers rely on TE for the latest innovations to support new features in their products.

TE Connectivity originated as a spin-off from Tyco International.

During the internet bubble in 1999, Tyco's CEO Dennis Kozlowski acquired AMP, a leading manufacturer of electronic connectors, and Raychem, a maker of specialized materials. These acquisitions allowed Tyco to pivot towards the booming internet and telecom sectors and formed the foundation of what would later become TE Connectivity.

While AMP and Raychem products did not directly contribute to software or communication protocols, they were essential in building the physical infrastructure for the internet. AMP's electronic connectors were vital in data centers, telecom networks, and consumer electronics, while Raychem's materials, such as cable insulation and heat shrink tubing, provided crucial support for these connections.

Kozlowski's tenure at Tyco was marked by his ambition to build an empire, accompanied by extravagant corporate excess for his own personal enrichment. The most notorious example of this was a $2 million birthday party for his wife in Sardinia, featuring an ice sculpture of Michelangelo’s David urinating vodka and a performance by Jimmy Buffett.

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