Intrinsic value of TE Connectivity - TEL

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$73.61

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$73.61

 
Intrinsic value

$82.37

 
Up/down potential

+12%

 
Rating

hold

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TEL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 26.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.04
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
Revenue, $m
  12,238
  13,229
  14,260
  15,331
  16,444
  17,601
  18,803
  20,053
  21,353
  22,705
  24,113
  25,579
  27,107
  28,700
  30,361
  32,094
  33,904
  35,794
  37,769
  39,833
  41,991
  44,249
  46,612
  49,085
  51,674
  54,385
  57,225
  60,201
  63,320
  66,589
  70,015
Variable operating expenses, $m
 
  11,293
  12,130
  13,000
  13,904
  14,843
  15,819
  16,834
  17,890
  18,989
  20,132
  20,774
  22,014
  23,308
  24,657
  26,065
  27,534
  29,069
  30,673
  32,349
  34,102
  35,936
  37,855
  39,863
  41,965
  44,167
  46,474
  48,891
  51,424
  54,078
  56,861
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  10,336
  11,293
  12,130
  13,000
  13,904
  14,843
  15,819
  16,834
  17,890
  18,989
  20,132
  20,774
  22,014
  23,308
  24,657
  26,065
  27,534
  29,069
  30,673
  32,349
  34,102
  35,936
  37,855
  39,863
  41,965
  44,167
  46,474
  48,891
  51,424
  54,078
  56,861
Operating income, $m
  1,902
  1,936
  2,130
  2,331
  2,540
  2,758
  2,983
  3,218
  3,462
  3,717
  3,981
  4,806
  5,093
  5,392
  5,704
  6,030
  6,370
  6,725
  7,096
  7,484
  7,889
  8,313
  8,757
  9,222
  9,708
  10,218
  10,751
  11,310
  11,896
  12,510
  13,154
EBITDA, $m
  2,487
  2,729
  2,942
  3,162
  3,392
  3,631
  3,879
  4,136
  4,405
  4,684
  4,974
  5,277
  5,592
  5,920
  6,263
  6,620
  6,994
  7,384
  7,791
  8,217
  8,662
  9,128
  9,615
  10,125
  10,659
  11,219
  11,804
  12,418
  13,062
  13,736
  14,443
Interest expense (income), $m
  117
  131
  155
  181
  208
  236
  265
  295
  327
  359
  393
  429
  465
  504
  544
  586
  629
  675
  722
  772
  823
  878
  934
  994
  1,056
  1,121
  1,189
  1,260
  1,335
  1,413
  1,495
Earnings before tax, $m
  1,162
  1,805
  1,975
  2,150
  2,332
  2,521
  2,718
  2,923
  3,136
  3,357
  3,588
  4,377
  4,627
  4,888
  5,160
  5,444
  5,741
  6,050
  6,374
  6,712
  7,066
  7,436
  7,823
  8,228
  8,653
  9,097
  9,563
  10,050
  10,561
  11,097
  11,659
Tax expense, $m
  -779
  487
  533
  580
  630
  681
  734
  789
  847
  906
  969
  1,182
  1,249
  1,320
  1,393
  1,470
  1,550
  1,634
  1,721
  1,812
  1,908
  2,008
  2,112
  2,222
  2,336
  2,456
  2,582
  2,714
  2,852
  2,996
  3,148
Net income, $m
  2,009
  1,318
  1,441
  1,569
  1,702
  1,841
  1,984
  2,134
  2,289
  2,451
  2,619
  3,195
  3,378
  3,568
  3,767
  3,974
  4,191
  4,417
  4,653
  4,900
  5,158
  5,428
  5,711
  6,007
  6,316
  6,641
  6,981
  7,337
  7,710
  8,101
  8,511

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  647
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  17,608
  18,323
  19,750
  21,234
  22,775
  24,377
  26,043
  27,774
  29,574
  31,448
  33,398
  35,429
  37,545
  39,751
  42,051
  44,452
  46,959
  49,576
  52,311
  55,170
  58,160
  61,287
  64,559
  67,984
  71,570
  75,326
  79,260
  83,381
  87,701
  92,228
  96,974
Adjusted assets (=assets-cash), $m
  16,961
  18,323
  19,750
  21,234
  22,775
  24,377
  26,043
  27,774
  29,574
  31,448
  33,398
  35,429
  37,545
  39,751
  42,051
  44,452
  46,959
  49,576
  52,311
  55,170
  58,160
  61,287
  64,559
  67,984
  71,570
  75,326
  79,260
  83,381
  87,701
  92,228
  96,974
Revenue / Adjusted assets
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
  0.722
Average production assets, $m
  3,243
  3,506
  3,779
  4,063
  4,358
  4,664
  4,983
  5,314
  5,658
  6,017
  6,390
  6,779
  7,183
  7,605
  8,046
  8,505
  8,985
  9,485
  10,009
  10,556
  11,128
  11,726
  12,352
  13,007
  13,694
  14,412
  15,165
  15,953
  16,780
  17,646
  18,554
Working capital, $m
  1,709
  1,508
  1,626
  1,748
  1,875
  2,006
  2,144
  2,286
  2,434
  2,588
  2,749
  2,916
  3,090
  3,272
  3,461
  3,659
  3,865
  4,081
  4,306
  4,541
  4,787
  5,044
  5,314
  5,596
  5,891
  6,200
  6,524
  6,863
  7,218
  7,591
  7,982
Total debt, $m
  4,070
  4,438
  5,178
  5,946
  6,745
  7,575
  8,437
  9,334
  10,266
  11,237
  12,247
  13,299
  14,395
  15,538
  16,730
  17,973
  19,272
  20,627
  22,044
  23,525
  25,074
  26,694
  28,389
  30,163
  32,020
  33,966
  36,004
  38,139
  40,376
  42,721
  45,180
Total liabilities, $m
  9,123
  9,491
  10,231
  10,999
  11,798
  12,628
  13,490
  14,387
  15,319
  16,290
  17,300
  18,352
  19,448
  20,591
  21,783
  23,026
  24,325
  25,680
  27,097
  28,578
  30,127
  31,747
  33,442
  35,216
  37,073
  39,019
  41,057
  43,192
  45,429
  47,774
  50,233
Total equity, $m
  8,485
  8,832
  9,520
  10,235
  10,978
  11,750
  12,553
  13,387
  14,255
  15,158
  16,098
  17,077
  18,097
  19,160
  20,269
  21,426
  22,634
  23,896
  25,214
  26,592
  28,033
  29,540
  31,118
  32,768
  34,497
  36,307
  38,203
  40,190
  42,272
  44,454
  46,742
Total liabilities and equity, $m
  17,608
  18,323
  19,751
  21,234
  22,776
  24,378
  26,043
  27,774
  29,574
  31,448
  33,398
  35,429
  37,545
  39,751
  42,052
  44,452
  46,959
  49,576
  52,311
  55,170
  58,160
  61,287
  64,560
  67,984
  71,570
  75,326
  79,260
  83,382
  87,701
  92,228
  96,975
Debt-to-equity ratio
  0.480
  0.500
  0.540
  0.580
  0.610
  0.640
  0.670
  0.700
  0.720
  0.740
  0.760
  0.780
  0.800
  0.810
  0.830
  0.840
  0.850
  0.860
  0.870
  0.880
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.940
  0.950
  0.960
  0.960
  0.970
Adjusted equity ratio
  0.462
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482
  0.482

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,009
  1,318
  1,441
  1,569
  1,702
  1,841
  1,984
  2,134
  2,289
  2,451
  2,619
  3,195
  3,378
  3,568
  3,767
  3,974
  4,191
  4,417
  4,653
  4,900
  5,158
  5,428
  5,711
  6,007
  6,316
  6,641
  6,981
  7,337
  7,710
  8,101
  8,511
Depreciation, amort., depletion, $m
  585
  793
  812
  831
  852
  873
  895
  918
  942
  967
  993
  471
  499
  528
  559
  591
  624
  659
  695
  733
  773
  814
  858
  903
  951
  1,001
  1,053
  1,108
  1,165
  1,225
  1,288
Funds from operations, $m
  539
  2,111
  2,253
  2,401
  2,554
  2,714
  2,880
  3,052
  3,231
  3,418
  3,612
  3,666
  3,877
  4,097
  4,326
  4,565
  4,815
  5,075
  5,348
  5,633
  5,931
  6,242
  6,569
  6,910
  7,267
  7,642
  8,034
  8,445
  8,875
  9,326
  9,800
Change in working capital, $m
  -1,383
  113
  117
  122
  127
  132
  137
  142
  148
  154
  161
  167
  174
  182
  189
  198
  206
  215
  225
  235
  246
  257
  269
  282
  295
  309
  324
  339
  356
  373
  391
Cash from operations, $m
  1,922
  3,686
  2,136
  2,279
  2,427
  2,582
  2,743
  2,909
  3,083
  3,264
  3,452
  3,499
  3,703
  3,915
  4,136
  4,367
  4,608
  4,860
  5,123
  5,398
  5,685
  5,985
  6,299
  6,628
  6,972
  7,333
  7,710
  8,105
  8,520
  8,954
  9,409
Maintenance CAPEX, $m
  0
  -225
  -243
  -262
  -282
  -303
  -324
  -346
  -369
  -393
  -418
  -444
  -471
  -499
  -528
  -559
  -591
  -624
  -659
  -695
  -733
  -773
  -814
  -858
  -903
  -951
  -1,001
  -1,053
  -1,108
  -1,165
  -1,225
New CAPEX, $m
  -628
  -263
  -273
  -284
  -295
  -307
  -319
  -331
  -344
  -358
  -373
  -389
  -405
  -422
  -440
  -459
  -480
  -501
  -523
  -547
  -572
  -598
  -626
  -655
  -686
  -719
  -753
  -789
  -826
  -866
  -908
Cash from investing activities, $m
  -1,581
  -488
  -516
  -546
  -577
  -610
  -643
  -677
  -713
  -751
  -791
  -833
  -876
  -921
  -968
  -1,018
  -1,071
  -1,125
  -1,182
  -1,242
  -1,305
  -1,371
  -1,440
  -1,513
  -1,589
  -1,670
  -1,754
  -1,842
  -1,934
  -2,031
  -2,133
Free cash flow, $m
  341
  3,198
  1,619
  1,732
  1,850
  1,973
  2,100
  2,232
  2,370
  2,512
  2,661
  2,667
  2,827
  2,994
  3,168
  3,349
  3,538
  3,735
  3,941
  4,156
  4,380
  4,614
  4,859
  5,115
  5,383
  5,663
  5,956
  6,264
  6,585
  6,922
  7,275
Issuance/(repayment) of debt, $m
  181
  699
  739
  768
  799
  830
  863
  897
  933
  970
  1,010
  1,052
  1,096
  1,143
  1,192
  1,244
  1,298
  1,356
  1,417
  1,481
  1,549
  1,620
  1,695
  1,774
  1,858
  1,945
  2,038
  2,135
  2,237
  2,345
  2,458
Issuance/(repurchase) of shares, $m
  -2,697
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,521
  699
  739
  768
  799
  830
  863
  897
  933
  970
  1,010
  1,052
  1,096
  1,143
  1,192
  1,244
  1,298
  1,356
  1,417
  1,481
  1,549
  1,620
  1,695
  1,774
  1,858
  1,945
  2,038
  2,135
  2,237
  2,345
  2,458
Total cash flow (excl. dividends), $m
  -2,173
  3,897
  2,358
  2,501
  2,649
  2,803
  2,963
  3,129
  3,302
  3,483
  3,671
  3,719
  3,923
  4,137
  4,360
  4,593
  4,836
  5,091
  5,358
  5,636
  5,928
  6,234
  6,554
  6,889
  7,240
  7,608
  7,994
  8,399
  8,823
  9,267
  9,734
Retained Cash Flow (-), $m
  1,100
  -663
  -688
  -715
  -743
  -772
  -803
  -834
  -868
  -903
  -940
  -979
  -1,020
  -1,063
  -1,109
  -1,157
  -1,208
  -1,262
  -1,318
  -1,378
  -1,441
  -1,507
  -1,577
  -1,651
  -1,728
  -1,810
  -1,896
  -1,987
  -2,082
  -2,182
  -2,288
Prev. year cash balance distribution, $m
 
  316
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,550
  1,670
  1,786
  1,906
  2,030
  2,160
  2,295
  2,434
  2,580
  2,731
  2,740
  2,903
  3,073
  3,251
  3,436
  3,628
  3,829
  4,039
  4,258
  4,487
  4,727
  4,977
  5,238
  5,512
  5,798
  6,098
  6,412
  6,741
  7,085
  7,446
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  3,404
  1,529
  1,554
  1,569
  1,574
  1,568
  1,550
  1,522
  1,482
  1,432
  1,301
  1,239
  1,169
  1,091
  1,009
  922
  833
  744
  656
  570
  489
  413
  343
  281
  226
  178
  138
  104
  77
  56
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

TE Connectivity Ltd., together with its subsidiaries, engages in the design, manufacture, and sale of connectivity and sensors solutions in the Americas, Europe, the Middle East, Africa, and the Asia–Pacific. The company operates through three segments: Transportation Solutions, Industrial Solutions, and Communications Solutions. The Transportation Solutions segment primarily provides terminals and connector systems and components, sensors, and relays, as well as application tooling and wires, and heat shrink tubing for use in the automotive, commercial transportation, and sensor markets. The Industrial Solutions segment offers terminals and connector systems and components; heat shrink tubing; relays; and wires and cables for industrial equipment, aerospace, defense, oil and gas, and energy markets. The Communications Solutions segment supplies electronic components, such as terminals and connector systems and components, undersea telecommunication systems, antennas, relays, and heat shrink tubing for the data and devices, subsea communications, and appliances markets. TE Connectivity Ltd. offers its products to approximately 150 countries primarily through direct selling to manufacturers, as well as through third-party distributors. The company was formerly known as Tyco Electronics Ltd. and changed its name to TE Connectivity Ltd. in March 2011. TE Connectivity Ltd. was incorporated in 2000 and is based in Schaffhausen, Switzerland.

FINANCIAL RATIOS  of  TE Connectivity (TEL)

Valuation Ratios
P/E Ratio 13
Price to Sales 2.1
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 20.2
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.7%
Cap. Spend. - 3 Yr. Gr. Rate 1.6%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 44.1%
Total Debt to Equity 48%
Interest Coverage 11
Management Effectiveness
Return On Assets 11.5%
Ret/ On Assets - 3 Yr. Avg. 11.2%
Return On Total Capital 15.4%
Ret/ On T. Cap. - 3 Yr. Avg. 16.2%
Return On Equity 22.2%
Return On Equity - 3 Yr. Avg. 22.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 33%
Gross Margin - 3 Yr. Avg. 33.2%
EBITDA Margin 15.2%
EBITDA Margin - 3 Yr. Avg. 18.2%
Operating Margin 15.5%
Oper. Margin - 3 Yr. Avg. 15%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 12.4%
Net Profit Margin 16.4%
Net Profit Margin - 3 Yr. Avg. 17%
Effective Tax Rate -67%
Eff/ Tax Rate - 3 Yr. Avg. -12.4%
Payout Ratio 25.3%

TEL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TEL stock intrinsic value calculation we used $12238 million for the last fiscal year's total revenue generated by TE Connectivity. The default revenue input number comes from 2016 income statement of TE Connectivity. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TEL stock valuation model: a) initial revenue growth rate of 8.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for TEL is calculated based on our internal credit rating of TE Connectivity, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of TE Connectivity.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TEL stock the variable cost ratio is equal to 85.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TEL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for TE Connectivity.

Corporate tax rate of 27% is the nominal tax rate for TE Connectivity. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TEL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TEL are equal to 26.5%.

Life of production assets of 14.4 years is the average useful life of capital assets used in TE Connectivity operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TEL is equal to 11.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $8485 million for TE Connectivity - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 353.722 million for TE Connectivity is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of TE Connectivity at the current share price and the inputted number of shares is $26.0 billion.


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COMPANY NEWS

▶ Telenor Moving Into Mobile Finance   [Mar-09-17 09:28PM  Bloomberg Video]
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▶ TE Connectivity Announces 3-in-2 Memory Card Connectors   [Feb-22-17 08:03AM  Business Wire]
▶ $50 Billion Fund Has A Fortune Invested In These 5 Stocks   [Dec-06-16 10:14AM  at Insider Monkey]
▶ Is TE Connectivity Ltd (TEL) A Good Stock To Buy?   [Dec-01-16 04:14PM  at Insider Monkey]
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▶ [$$] TE Connectivity's Revenue Jumps 12% in Latest Quarter   [05:00AM  at The Wall Street Journal]
▶ Athenahealth hires new executive focused on company culture   [Nov-01-16 02:31PM  at bizjournals.com]
▶ TE SubCom Supplies MAREA Submarine Cable System   [Oct-19-16 09:00AM  PR Newswire]
▶ [$$] Google, Facebook to Invest in U.S.-China Data Link   [Oct-12-16 11:39PM  at The Wall Street Journal]
Stock chart of TEL Financial statements of TEL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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