TE, Littelfuse and nVent connectivity
For immediate release
Chicago, IL – December 13, 2021 – Today Zacks Equity Research is discussing TE Connectivity TEL, Littelfuse LFUS, and nVent Electric NVT.
The electronics industry of Zacks – Miscellaneous has benefited from the ongoing automation momentum and increased spending by manufacturers of semiconductors, automobiles, machinery and mobile phones. Industry players love TE connectivity, Littelfuse and nVent Electric remain well positioned to benefit from the strong adoption of AI and the democratization of IoT techniques, which are transforming robotics, industrial automation, transportation systems, retail and healthcare.
The Zacks Electronics – Miscellaneous Components industry primarily comprises of companies supplying a wide range of accessories and parts used in electronic products. Their offerings include power control and sensor technologies to mitigate damage to equipment, product safety testing, and advanced medical solutions.
Industry participants cater to a variety of end markets such as telecommunications, automotive electronics, medical devices, industry, transportation, energy harvesting, defense electronics and aerospace and l consumer electronics. Its customers are mainly OEMs, independent distributors of electronic components and electronic manufacturing service providers.
3 trends shaping the future of electronics – miscellaneous component industry
Boom a Tailwind Automation: The demand for faster, more powerful and energy efficient electronics has led to increased automation. The use of control systems such as computers and robots as well as information technology to manage different processes and machines are driving the growth of the industry.
The growing installation of collaborative robots, which add efficiency to production processes by working with production workers, will continue to benefit industry participants. The factory automation solutions supported by IoT are other contributing factors. The evolution of smart cars and autonomous vehicles is expected to drive the growth of the industry.
Miniaturization remains a key factor:Industry participants have benefited from the ongoing transition in semiconductor manufacturing technology. Demand for advanced packaging, which enables the miniaturization of electronic products, remains strong. The constant shift to smaller dimensions, the rapid adoption of new device architectures such as FinFET and 3D-NAND transistors, and the increasing use of new materials of manufacture to increase the density of transistors and bits have stimulated the demand for solutions provided by industry players.
Supply chain disruptions remain a concern:Industry players are reeling from the macroeconomic problems induced by the coronavirus. Supply chains have been disrupted by social distancing and on-site shelter measures, due to the pandemic, which in turn have severely affected industry participants. Although economies are gradually reopening in several parts of the world, production delays remain a major concern.
The pandemic has heightened concerns over the economic slowdown, which continues to wreak havoc on new bookings from industry players. The increase in health risks and deaths from the virus outbreak has made people more worried about further disruptions, which, in turn, are hurting their spending habits.
Zacks industry rankings show bright prospects
Zacks Electronics – Testing Equipment industry is housed within the larger Zacks IT and Technology industry. He currently carries a Zacks Industry Rank # 123, which places him in the top 48% of over 250 Zacks industries.
The group’s Zacks Industry Rank, which is essentially the average of the Zacks Rank of all member stocks, indicates a near-term bullish outlook. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of industries ranked by Zacks is the result of positive earnings prospects for all of the constituent companies. Looking at the revisions to the overall earnings estimates, it looks like analysts are bullish on the earnings growth potential of this group. Since June 30, 2021, industry profit estimates for the current year have increased by 3%.
Before presenting a few stocks that you might want to consider for your portfolio, let’s take a look at the recent stock market performance and industry valuation.
Industry lags behind the sector and the S&P 500
The Zacks Electronics Industry – Miscellaneous Components has underperformed the broader Zacks IT and technology sector and the S&P 500 Composite over the past year.
The industry lost 6.6% during this period against the S&P 500 and the broader sector rallying 29% and 30.3%, respectively.
Current industry assessment
Based on the 12-month futures price-to-earnings ratio, which is a multiple commonly used to value stocks in Electronics – Miscellaneous Components, the industry is currently trading at 18.24X versus 21.77X for the S&P 500. and 29.66X for the sector.
Over the past five years, the industry has traded as low as 25.33X, as low as 14.56X, and recorded a median of 18.34X, which is shown in the chart below.
3 Electronics – Stocks of miscellaneous components to buy
Littelfuse:The Chicago, Ill.-Based company has benefited from strong product demand, strong execution and disciplined cost management measures. Strong automotive demand and strength in several electronics and industrial markets are also driving growth. The higher than expected demand for electronics resulting from ongoing trends in work, study and stay at home is a key enabler.
Zacks Rank # 1 (Strong Buy) is well positioned to benefit from a robust design business, given several strategic wins in high growth industrial, electronics and transportation applications. You can see The full list of today’s Zacks # 1 Rank stocks here.
Littelfuse has gained 21.9% in the past year. Zacks’ consensus estimate for LFUS earnings in 2021 has been revised 9.2% up to $ 12.95 per share in the past 60 days.
nVent Electric: The London, UK-based company benefited from a strong portfolio and modular and digital platforms. In addition, the growth, profits and treasury strategies of the company remain remarkable. In addition, strengthening relationships with strategic distribution partners should continue to benefit the company.
Zacks Rank # 2 (Buy), which is a provider of electrical connection and protection solutions, remains optimistic about strong demand for its products and solutions. In addition, strong strategy execution in high growth verticals, product launches, global expansion and strategic acquisitions remain positive winds.
nVent Electric has gained 57.8% over the past year. Zacks’ consensus estimate for NVT earnings in 2021 has been revised 2.6% up to $ 1.95 per share in the past 60 days.
TE connectivity:The Switzerland-based company is well positioned to benefit from strong momentum in data centers. Strong demand for data and devices in cloud applications and data centers, thanks to the growing trend of working from home due to the pandemic, is likely to drive growth. Strong content growth, the benefits of the First Sensor buyout, growth in automotive and commercial transportation sales, and strength in automotive applications remain key strengths.
This Zacks Rank # 3 (Hold) company manufactures and designs products that connect and protect the flow of energy and data within millions of products used by consumers and industries. TEL is likely to continue to benefit from the growing proliferation of autonomous features and technology in hybrid and electric vehicles.
TE Connectivity has gained 33.1% over the past year. Zacks’ consensus estimate for TEL’s earnings for fiscal 2022 has remained unchanged at $ 6.99 per share for the past 60 days.
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