TEL
TE Connectivity plc
$208.05
Cyclical & Capital-Intensive
70%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 91.5% above fair value
You pay
$208.05
Bear
$81.48
Fair
$108.64
Bull
$135.80
Bear
$81.48
-60.8%
$6.79 × 12x
Fair
$108.64
-47.8%
$6.79 × 16x
Bull
$135.80
-34.7%
$6.79 × 20x
Adjust Assumptions
16.0x
6.79$
Key Value Driver
Through-cycle normalized EPS ($6.79)
Implied Market Multiple
30.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (29 analysts)
$253.22
Divergence from AlphaVal
57%
Summary
Using 7-year normalized EPS of $6.79 at a 16x cycle multiple, the base-case value is $108.64 per share. P/TBV cross-check: 18.7x.
Warnings
Price-to-book value of 18.7x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $253.22 (from 29 analysts). Our estimate is 57% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing