TE Connectivity Stock Jumps. Earnings Show That Managing Tariffs Can Be Easy.

TE Connectivity beat earnings expectations Wednesday. (Dreamstime)

Electrical components supplier TE Connectivity reported better-than-expected fiscal third-quarter sales and earnings. Guidance for the coming quarter also topped Wall Street projections.

Shares rose 12% on Wednesday, closing at $202.04, while the S&P 500 and Dow Jones Industrial Average gained 0.8% and 1.1%, respectively.

Results showed that despite tariff fears, there is growth for companies serving the right end-markets. Aerospace, electrification, and artificial intelligence were standouts for TE.

TE Connectivity reported Wednesday adjusted fiscal third-quarter earnings per share of $2.27 from sales of $4.5 billion. That tops its guidance for earnings of $2.06 and sales of $4.3 billion. Wall Street was projecting profit of $2.10 a share and sales of $4.3 billion.

A year ago, TE reported earnings of $1.91 a share from sales of $4 billion.

For the fourth fiscal quarter, TE expects to generate earnings of $2.27 a share from sales of almost $4.6 billion. That’s better than current analyst projections of $2.14 and $4.4 billion, respectively.

TE’s car business was a little slow, with auto makers, particularly in Europe and the U.S., slowing production amid tariff headwinds. But businesses related to aerospace, electrification, and AI more than picked up the slack.

TE’s aerospace-linked business grew 8.4% year over year in the quarter. Its energy business expanded 70%, likely helped by its recently closed acquisition of Richards. The deal closed in early April. TE’s data-center business grew 84%.

AI-related business amounted to roughly $300 million of sales in fiscal year 2024 for the company. That number will be closer to $800 million for fiscal 2025, said CEO Terrence Curtin. AI “momentum is continuing … I still think we’re early to middle innings” of the AI buildout, he added.

Tariffs weren’t the challenge TE imagined, either. They amounted to about a $70 million headwind instead of the $130 million expected at the start of the quarter. Most of the improvement, however, was simply delayed tariff implementation, explained Curtin, adding that his company is actively managing tariff exposure with its supply base.

Overall, it looked like a solid report with growth continuing into the next quarter. Navigating through economic weakness and tariff fears is easier when some businesses are booming.

Coming into Wednesday, TE stock had risen about 26% this year, about 19 percentage points better than the S&P 500 and 22 percentage points ahead of the Dow.

Gains have left TE trading for about 22 times expected earnings over the coming 12 months, according to FactSet, similar to the market multiple.

Write to Al Root at allen.root@dowjones.com