TE Connectivity: Is the Reset Already Priced In?

The market's appetite for growth has long been a double-edged sword. On one hand, it rewards companies that deliver consistent performance with soaring valuations; on the other, it risks inflating multiples beyond what fundamentals can justify. TE Connectivity (TEL), a global leader in connectivity and sensor solutions, has recently reported robust financial results, yet its valuation metrics suggest a market that may be pricing in a future of unrelenting growth-or perhaps a reset that has yet to materialize.

A Strong Foundation, But at What Price?

TE Connectivity's Q3 2025 results underscore its resilience. The company reported record net sales of $4.5 billion, a 14% year-over-year increase driven by 9% organic growth, with the Industrial segment as a standout performer. Adjusted earnings per share (EPS) hit $2.27, up 19% year-over-year, while free cash flow reached $962 million, reflecting disciplined capital management. These numbers, coupled with strategic acquisitions and shareholder returns, paint a picture of a company executing its strategy with precision.

However, the market's response has been even more dramatic. As of September 2025, TE Connectivity's price-to-earnings (P/E) ratio stood at 35.01, a sharp rise from 14.54 in 2024 and well above its 10-year historical average of 27.66. By November 20, 2025, the P/E had slightly dipped to 34.80, still 65% higher than its 12-month average of 21.08. This surge suggests investors are not merely valuing past performance but are instead betting on a future where TE's growth trajectory remains unchallenged.

Valuation Realism vs. Market Optimism

To assess whether this optimism is warranted, it is critical to compare TE's metrics to industry benchmarks. The Technology sector's average P/E ratio in 2025 is 29.83, meaning TE's multiple is 26% higher. Even among peers, TE's valuation is elevated: its P/E of 35.01 is higher than 3M Co (MMM) and CommScope (COMM) but lower than Amphenol (APH) and Corning (GLW), with an average peer P/E of 35.09. This suggests TE is broadly in line with its closest competitors but remains a premium play within its sector.

The picture becomes more nuanced when considering other metrics. TE's enterprise value-to-EBITDA (EV/EBITDA) ratio is projected to rise to 16.4x in 2025, up from 12.8x in 2024. While this reflects improved profitability, it also outpaces the Hardware industry's median P/E of 26.28 as of August 2025, indicating a premium for TE's growth prospects. Meanwhile, the PEG ratio-a measure of valuation relative to earnings growth-was 0.2x in 2024, suggesting the stock is undervalued relative to its growth rate. However, this metric becomes less reliable in 2025 due to the absence of negative earnings growth, leaving the P/E ratio as the primary gauge of valuation realism.

The Case for Caution

The disconnect between TE's fundamentals and its valuation lies in the assumption of sustained growth. While the company's 19% EPS growth in Q3 is impressive, extrapolating this into the future without accounting for macroeconomic headwinds or sector-specific risks could be perilous. For instance, the Industrial segment's performance-driven by automation and electrification trends-remains vulnerable to a slowdown in global manufacturing or a correction in energy transition investments.

Moreover, TE's P/E of 35.01 implies that the market expects earnings growth to outpace historical averages for years to come. Given that the 10-year average P/E is 27.66, a return to this level would represent a 23% drop in the stock price, even if fundamentals remain unchanged. This raises the question: Is the market already pricing in a reset, or is it overestimating the durability of TE's current growth?

Conclusion: A Tug-of-War Between Optimism and Prudence

TE Connectivity's financial performance in Q3 2025 is undeniably strong, but its valuation tells a different story. The company's P/E ratio, while in line with peers, is significantly above historical and industry averages, reflecting a market that appears to have priced in a future of uninterrupted growth. Yet, this optimism may not account for the inherent volatility of industrial demand or the broader economic uncertainties looming in 2025.

For investors, the key question is whether TE's management can sustain the current growth trajectory to justify these multiples. If the company can continue to deliver double-digit EPS growth and maintain its free cash flow margins, the premium valuation may hold. However, if macroeconomic conditions deteriorate or sector growth moderates, the gap between current valuations and fundamentals could widen, forcing a painful reset. In this sense, the market may not have priced in a reset-it may be pricing in a future that is far from certain.