TE Connectivity Q4 FY2026 Earnings: Industrial Growth Drives a 12% Sales Gain

TE Connectivity (NYSE: TEL) reported fiscal Q4 2026 net sales of $5.312 billion, up 11.9% year over year, while GAAP diluted EPS from continuing operations rose 39% to $3.10 from $2.23. Industrial Solutions generated most of the sales increase, and broader operating leverage lifted GAAP operating margin to 20.6%. Orders rose 29% to $6.1 billion, while free cash flow reached $1.241 billion for the quarter ended September 25, 2026.

Core Financial Results

Organic sales increased 13.4%, exceeding reported growth because translation and other items reduced the reported increase by $71 million. Acquisitions made no contribution to quarterly growth.

Gross profit grew faster than sales, while GAAP operating income increased 19.3%. Higher selling, general and administrative expenses and research and engineering spending were more than offset by the increase in gross profit.

Business and Segment Performance

Industrial Solutions was the principal growth driver, with sales rising nearly 20% and adjusted operating income increasing to $627 million from $514 million. Transportation Solutions grew more moderately but also expanded its operating margins.

The segment figures include an $87 million reconciling reduction related to IEEPA tariff refunds that TE expects to return to customers, bringing consolidated sales to $5.312 billion.

Within Industrial Solutions, digital data networks led with 34.4% organic growth. Automation and connected living increased 17.6%, aerospace, defense and marine rose 16.0%, and energy grew 11.7% organically. Medical sales were nearly unchanged, increasing 1.3% organically.

Transportation performance was more mixed. Commercial transportation produced 17.8% organic growth, automotive increased 5.9%, and sensors declined 1.7%. This left the segment growing but at a considerably slower rate than Industrial Solutions.

Tax Benefits Amplified GAAP EPS Growth

Pretax income increased about 20% to $1.076 billion, but income tax expense declined to $175 million from $233 million. The GAAP effective tax rate consequently fell to 16.3% from 26.0%, including a $59 million benefit related to a lower valuation allowance on certain tax losses and credit carryforwards.

This tax effect explains much of the gap between the 39% increase in GAAP diluted EPS and the 21% increase in adjusted EPS. The adjusted effective tax rate was comparatively stable at 21.1%, versus 21.3% a year earlier. A lower diluted share count—291 million compared with 298 million—also supported per-share growth.

Cash Flow and Balance Sheet

Operating cash flow increased 7.5% to $1.528 billion, slower than the rise in net income. Accounts receivable used $227 million of quarterly cash, compared with a $50 million source a year earlier, although increases in accounts payable and accrued liabilities provided partial offsets. After $287 million of net capital expenditures, free cash flow was $1.241 billion.

TE repurchased $544 million of shares and paid $226 million in dividends during the quarter, for total shareholder returns of $770 million. Cash and equivalents ended the fiscal year at $1.697 billion, up from $1.255 billion, while combined short- and long-term debt declined slightly to $5.639 billion from $5.694 billion.

Year-end accounts receivable increased to $3.839 billion from $3.403 billion, and inventories rose to $2.962 billion from $2.699 billion. Those balances remain relevant to future cash conversion after earnings grew substantially faster than quarterly operating cash flow.

Fiscal 2027 Guidance

Management expects fiscal Q1 2027 sales and EPS to maintain double-digit growth. It also expects full-year organic growth to be similar to fiscal 2026, when organic sales increased 11.9%.

Quarterly orders of $6.1 billion increased 29% year over year and 6% sequentially. Full-year orders rose 27% to $22.2 billion, providing support for the growth outlook, although the pace at which orders convert into revenue will remain important.

Recent Insider Transactions

The available six-month summary showed 22,008 shares purchased in five transactions and 18,800 shares sold in two transactions, resulting in net purchases of 3,208 shares, or 0.9% of reported insider holdings. Among the latest entries with complete details, activity was concentrated in derivative exercises and direct sales by officer Shadrak W. Kroeger.

A May 15, 2026 entry for officer Malavika Sagar did not provide a transaction description or value and is therefore excluded from the table. The reported transactions should be viewed as factual disclosures rather than evidence of insiders’ outlook for the company.

Risks Investors Need to Watch

• Dependence on Industrial and data-network demand: Industrial Solutions and digital data networks supplied a disproportionate share of growth. A slowdown in customer AI, data-center or power infrastructure spending could weigh on consolidated growth.
• Uneven Transportation performance: Commercial transportation grew rapidly, but automotive growth was more moderate and sensors declined organically. Continued weakness in these areas could widen the gap between the two main segments.
• Execution against a demanding outlook: Fiscal Q1 guidance calls for roughly 15% sales growth, while full-year organic growth is expected to remain near fiscal 2026’s pace. Achieving that outlook depends on strong orders converting into revenue.
• Potential normalization of the tax rate: A $59 million tax benefit helped GAAP EPS grow much faster than adjusted EPS. If the GAAP tax rate normalizes, future reported EPS growth may not receive the same support.
• Working-capital demands: Receivables and inventories increased at fiscal year-end, and quarterly cash flow grew more slowly than earnings. Further working-capital investment could limit cash conversion even if sales continue to rise.

Conclusion

TE Connectivity ended fiscal 2026 with double-digit quarterly sales growth, higher operating margins and a clear lead from Industrial Solutions, particularly digital data networks. The order backlog and Q1 outlook indicate continued momentum, while investors should monitor the conversion of orders into revenue, Transportation’s uneven performance, working-capital requirements and the extent to which GAAP earnings growth depends on tax benefits.