Yahoo Finance Should You Investigate TE Connectivity Ltd. (NYSE:TEL) At US$143?
Let's talk about the popular TE Connectivity Ltd. (NYSE:TEL). The company's shares saw a decent share price growth of 11% on the NYSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at TE Connectivity’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for TE Connectivity
What Is TE Connectivity Worth?
According to our valuation model, TE Connectivity seems to be fairly priced at around 4.1% below our intrinsic value, which means if you buy TE Connectivity today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $149.44, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that TE Connectivity’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of TE Connectivity look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -18% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for TE Connectivity. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Currently, TEL appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on TEL for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on TEL should the price fluctuate below its true value.
So while earnings quality is important, it's equally important to consider the risks facing TE Connectivity at this point in time. For instance, we've identified 2 warning signs for TE Connectivity (1 makes us a bit uncomfortable) you should be familiar with.
If you are no longer interested in TE Connectivity, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
