Is TE Connectivity Ltd (TEL) overvalued?
On Equity Rank's model estimate, TEL trades 12% above its fair value. TE Connectivity Ltd (TEL) last closed at $207.01; the multi-method model fair value is $184.21.
| Price | Model fair value | Price vs model |
|---|---|---|
| $207.01 | $184.21 | 12% above |
What the answer rests on
- 5 of 11 valuation methods put TEL's value above its price and 6 put it below, so the methods disagree.
- To justify today's price, TEL's free cash flow would need to grow about 6.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 12.3% a year.
- TEL trades at 19.9 times its last year's earnings, against a median of 26.1 for 34 profitable Hardware companies.
- Over the past year the price sat below the model fair value on 3% of trading days. The gap ranged from 7% below to 54% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind TEL's fair value · What prices assume · Other companies