While the spotlight has been on Tyco International (TYC) and the Wall Street Journal's report of a takeover bid by France's Schneider Electric, a company with a similar name has been quietly working on a reversal.
Formerly known as Tyco Electric, the company now called TE Connectivity (TEL) is in the process of potentially staging a bullish trend reversal.
What is nice about this stock is that it does not seem to be over-priced so it could have some room to run. Looking at some of the valuation numbers, we see the stock easily has a "reasonable value" profile. Trailing PE of 13 and forward PE of 10. Price-to-sales of 1.26, PEG of 1.04 and ratio of Enterprise Value to EBITDA of only 7.35
In terms of growth, TEL has been doing OK. Year-over-year quarterly revenue increased by 10% and earnings by 54%. Sequential quarterly sales and earnings were up 2% and 4% respectively. Return on equity is over 16%, indicating management is doing a decent job of growing the company.
After the charts and the numbers, it's worth discussing what the company actually does. TE Connectivity, headquartered in Switzerland, manufactures electronic components, network equipment and undersea telecommunication systems. They are a global, $15.7 billion company that designs and manufactures over 500,000 products that connect and protect the flow of power and data. TEL has nearly 100,000 employees and sells into numerous industry verticals from consumer electronics, energy and healthcare, to automotive, aerospace and communication networks. The company pays a 2.1% dividend.
So far, pretty much everything about the company sounds pretty good but there is one issue that needs to be mentioned and that is debt. The company's debt to equity ratio is an excessive 43.85
All in all, TEL is a solid company that will benefit from a growing global economy. Not as exciting as Apple, perhaps, but there is nothing wrong with making the low profile components and systems that enable communications, energy exploration, aviation, patient monitoring and a host of other useful industrial and consumer applications. Other than the debt issue, the financials are pretty decent and the technicals are looking promising. In my opinion, TEL deserves a look.
Disclosure: no positions in any of the stocks mentioned in this post
- ▼ April (5)
- ► 2010 (189)
- ► 2009 (312)
- ► 2008 (266)
- ► 2007 (200)
|Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.|