Tyco Electronics, Ltd. (TEL) recently surprised on estimates for the 4th quarter in a row as customers replenish inventories around the world. Tyco is trading with a PEG ratio of just 0.96.
Company Description
Tyco Electronics is a Swiss-based manufacturer of about 500,000 engineered electronic components that go into consumer and industrial products in many industries including automotive, consumer electronics, telecommunications, aerospace, medical and alternative energy.
Tyco Electronics Beat by 20.51% in the First Quarter
On Jan 27, Tyco Electronics reported its fiscal 2010 first quarter results which surprised on the Zacks Consensus by 8 cents. Earnings per share were 47 cents compared to the Zacks Consensus of 39 cents. The company made 21 cents in the same quarter a year ago.
Sales jumped 7% to $2.9 billion from the same quarter last year. Sales were also up 7% sequentially. The Electronic Components segment saw another improving quarter due to stronger end demand as sales jumped 14%.
The Automotive segment also saw a rebound, growing 17%. Tyco Electronics is also seeing customers replenish inventories around the globe. Operating margins also improved to 11.5% from 8.2% in the year ago quarter.
Undersea Telecommunications, saw sales fall 25% from the fiscal fourth quarter but that was within Tyco’s projections for the segment which is seeing lower project activity.
Total orders increased 15% year over year and also showed a gain of 2% sequentially.
Second Quarter 2010 Outlook
Given the improving sales outlook the company has seen over the past few quarters, it is not surprising that it sees further improvement in the fiscal second quarter. Earnings per share are expected to be in the range of 49 cents to 54 cents. This is much higher than the 14 cents reported in the second quarter of 2009.
Analysts have been scrambling to adjust estimates as a result of the earnings report and guidance.
The second quarter Zacks Consensus Estimate jumped 36.8% to 52 cents from 38 cents in the last week.
Nine estimates have also moved higher for fiscal 2010. The Zacks Consensus has jumped 38 cents to $1.99 per share in the prior 7 days. That is earnings growth of 139.64%.
Value Fundamentals
Tyco Electronics is a Zacks #1 Rank (strong buy) stock. The company has a forward P/E of 12.9 and a price-to-book ratio of 1.68. Tyco Electronics also rewards shareholders with a dividend yielding 2.50%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
