TE Connectivity TEL delivered second-quarter fiscal 2026 adjusted earnings of $2.73 per share, up 23.5% from the year-ago quarter and beat the Zacks Consensus Estimate by 1.1%.
Net sales were $4.74 billion, up 14.5% year over year and beat the consensus mark by 0.9%. Top-line performance was supported by growth across both operating segments and solid execution. A key highlight was record orders of $5.3 billion, up 25% year over year, driving a book-to-bill of 1.12.
TEL Segment Growth Led by Industrial Momentum
Industrial Solutions generated fiscal second-quarter revenues of $2.32 billion, increasing 27% year over year on a reported basis and 17% organically. The quarter reflected broad-based strength, with Digital Data Networks delivering $714 million of sales and rising 48% year over year on a reported basis and 46% organically.
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Within Industrial, Energy produced revenues of $445 million, up 60% reported and 11% organically, while Automation & Connected Living grew to $579 million, reflecting 13% reported growth and 8% organic growth. Aerospace, Defense and Marine increased to $408 million, and Medical revenues were $176 million, down modestly year over year.
Transportation Solutions posted fiscal second-quarter revenues of $2.42 billion, up 5% year over year on a reported basis, though organic sales declined 1%. Automotive revenues were $1.76 billion, increasing 2% reported but down 4% organically, with gains in Europe offset by market declines in North America and Asia.
Commercial Transportation stood out, with revenues of $433 million and year-over-year growth of 21% reported and 17% organically. Sensor revenues were $227 million, up 2% reported and down 3% organically, reflecting regional mix and end-market softness in parts of North America and Europe.
TE Connectivity Expanded Profitability on Execution
In second-quarter fiscal 2026, GAAP gross margin expanded 160 basis points (bps) year over year to 36.8%.
Selling, general, and administrative expenses, as a percentage of net sales, increased 30 bps to 11.3%. Research, development, and engineering expenses were up 10 bps to 5% of net sales.
On an adjusted basis, operating income was $1.03 billion, up 21.6% year over year. Adjusted operating margin expanded 130 bps year over year to 21.7%.
TEL’s Balance Sheet & Cash Flow
As of March 27, 2026, cash and cash equivalents were $1.11 billion with long-term debt of $5.55 billion as of March 27, 2026.
Cash generation remained a support point. Net cash provided by operating activities was $947 million in the quarter, and free cash flow was $680 million, up from $424 million a year ago.
TE Connectivity continued to return capital to shareholders, with $819 million spent on share repurchases and $417 million paid in dividends during the first half. The company also announced a 10% increase in its quarterly cash dividend.
TEL Q3 Outlook Calls for Double-Digit Gains
TE Connectivity expects third-quarter fiscal 2026 sales of approximately $5 billion, implying 10% reported growth and 9% organic growth year over year. Adjusted earnings are projected at approximately $2.83 per share, which indicates 17% year-over-year growth.
Management tied the outlook to ongoing orders momentum and its positioning in trends such as AI-related data demand, next-generation transportation and electric grid modernization, while continuing to invest in new products and technologies to support customers globally.
Zacks Rank & Other Stocks to Consider
Currently, TE Connectivity carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Sandisk SNDK, Garmin GRMN and Corning GLW. Sandisk sports a Zacks Rank #1 (Strong Buy) at present, while each of Garmin and Corning has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Corning and Garmin are scheduled to report their first-quarter 2026 results on April 28 and 29, respectively. Sandisk is set to report its third quarter fiscal 2026 results on April 30.
Corning, Garmin and Sandisk shares have surged 89%, 30.9% and 280.6%, respectively, on a year-to-date basis.
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TE Connectivity Ltd. (TEL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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