TE Connectivity Crushes Q2 With Record $2.73 EPS, Orders Surge 25%
TE Connectivity (NYSE: TEL) delivered another quarter of outperformance, with adjusted earnings per share hitting a record $2.73 in the second fiscal quarter ended March 27, 2026 — a 24% surge from $2.20 in the prior year period. The industrial technology giant's momentum shows no signs of slowing as record orders point to continued strength ahead.
Key Numbers
The numbers tell a compelling growth story across multiple metrics. Revenue climbed 15% year-over-year to $4.74 billion, with organic growth of 7% after adjusting for acquisitions and currency impacts. Both the Industrial and Transportation segments contributed to the expansion, demonstrating broad-based demand for TE's connectivity solutions.
Profitability metrics showed meaningful improvement. Adjusted operating margin expanded 130 basis points to 22%, while GAAP operating margin improved 200 basis points to 20%. This margin expansion dropped straight to the bottom line, with GAAP EPS from continuing operations reaching $2.90, up from the prior year's levels.
Perhaps most impressive was the order book performance. TE booked record orders of $5.3 billion, representing 25% year-over-year growth with double-digit increases across both segments and growth in all business units. This order strength translates to a book-to-bill ratio well above 1.0, suggesting revenue acceleration could continue.
Cash generation remained robust, with operating cash flow of $1.8 billion for the first half of fiscal 2026. Free cash flow reached $1.3 billion, up 17% year-over-year, providing ample firepower for both growth investments and shareholder returns. The company returned $1.2 billion to shareholders in the first half and announced a 10% increase to its quarterly dividend.
What Management Said
CEO Terrence Curtin struck an optimistic tone, emphasizing the company's strategic positioning in high-growth megatrends. "This performance and our record orders were driven by our strategic positioning in key trends including AI, next generation transportation and electric grid modernization, along with the broadening of growth across our portfolio," Curtin stated.
The CEO highlighted how TE is capitalizing on the proliferation of data and power infrastructure needs, providing customers with what he called "leading interconnect technologies." This positioning appears particularly relevant as artificial intelligence deployments drive unprecedented demand for data center infrastructure and power distribution systems.
Curtin also pointed to operational resilience, noting that the strong margin performance "reflects the resilience we've built to mitigate the dynamic environment we continue to operate in around the world." This comment suggests TE has successfully navigated supply chain challenges and geopolitical uncertainties that have plagued many industrial companies.
Looking forward, management expressed confidence in sustained momentum. For the third fiscal quarter, TE expects sales of approximately $5 billion, representing 10% reported growth and 9% organic growth. Adjusted EPS is projected at approximately $2.83, which would mark a 17% year-over-year increase.
The guidance implies continued strong operational performance, with management citing "ongoing orders momentum across all businesses" as a key driver. The company also emphasized its commitment to innovation, with Curtin noting continued investments in "innovative products and technologies that support our global customers and fuel our future growth."
What to Watch
Several factors warrant close monitoring as TE moves through fiscal 2026. The artificial intelligence infrastructure boom represents a significant opportunity, with TE's connectivity solutions playing a critical role in data center buildouts. The pace and scale of AI-related capital expenditures by hyperscalers and enterprises will likely influence TE's Industrial segment performance.
Electric grid modernization presents another major growth driver. As utilities upgrade aging infrastructure and adapt to renewable energy integration, demand for TE's power distribution and connectivity products should remain elevated. The recent order strength suggests this trend has legs.
In the Transportation segment, the transition to electric vehicles and advanced driver assistance systems continues to drive content growth per vehicle. While overall auto production can be cyclical, TE's exposure to high-growth electrification trends provides some insulation from traditional automotive volatility.
Margin progression deserves attention as well. The 130 basis point improvement in adjusted operating margin demonstrates strong operational execution, but sustainability will depend on TE's ability to maintain pricing power while managing input costs and supply chain dynamics.
The company's capital allocation strategy also merits watching. With strong free cash flow generation and a healthy balance sheet, TE has flexibility to pursue acquisitions, increase shareholder returns, or accelerate organic growth investments. The recent 10% dividend increase signals confidence, but investors should monitor how the company balances growth investments against shareholder returns.
Geopolitical considerations remain relevant given TE's global manufacturing footprint and exposure to China. Any escalation in trade tensions or supply chain disruptions could impact results, though management's comments about building resilience suggest some preparedness for such scenarios.
With a book-to-bill ratio above 1.0 and record orders across all businesses, TE Connectivity appears well-positioned for continued growth. The combination of secular tailwinds from AI, electrification, and grid modernization with strong operational execution has created meaningful momentum that should support performance through the remainder of fiscal 2026.
*Source: TE Connectivity Q2 2026 Earnings Release (Form 8-K/EX-99.1)*
*StockCliff Research*