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Amphenol (APH) Q1 Earnings Beat on Strong Organic Growth

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Amphenol Corporation (APH - Free Report) delivered first-quarter 2018 adjusted earnings of 83 cents per share that beat the Zacks Consensus Estimate by 3 cents and increased 20.3% from the year-ago quarter.

Net sales increased 19.7% year over year to $1.87 billion, which comfortably surpassed the Zacks Consensus Estimate of $1.80 billion. Favorable currency exchange rate contributed $63 million in the quarter.

Revenues were driven by strong organic growth across most of Amphenol’s end markets, in particular, mobile devices, military, industrial, automotive, and commercial air.

Interconnect Products and Assemblies (94.8% of net sales) revenues surged 20.9% from the year-ago quarter to $1.77 billion. Moreover, Cable Products and Solutions sales were $96.9 million, up 0.3% year over year.

Operating Details

Gross margin contracted 60 basis points (bps) from the year-ago quarter to 32.5%.
 

Amphenol Corporation Price, Consensus and EPS Surprise

 

Selling, general & administrative (SG&A) as percentage of revenues increased 60 bps from the year-ago quarter to 12.3%.

Operating margin expanded 10 bps on a year over year basis to 20.2%.

Segment wise, Interconnect Products and Assemblies operating margin remained flat at 22.1%. However, Cable Products and Solutions operating margin declined 250 bps to 11.7%.

Balance Sheet and Cash Flow

As of Mar 31, 2018, Amphenol had cash and cash equivalents worth $1.02 billion, lower than $17.2 billion as of Dec 31, 2017.

Cash flow from operations was $130.2 million at the end of the first quarter.

During the quarter, the company repurchased approximately 4.2 million shares and completed its $1 billion two-year open market stock repurchase plan.

Amphenol’s board also approved a 21% increase in dividend payout as well as a new three-year open market stock repurchase plan. The quarterly dividend will increase from 19 cents to 23 cents per share. The new three-year open market stock repurchase plan is authorized for the purchase of up to $2 billion of Amphenol’s common stock.

Guidance

For the second quarter, Amphenol projects sales between $1.855 billion and $1.895 billion. Adjusted earnings are expected between 83 cents and 85 cents per share.

For full-year 2018, Amphenol now expects sales in the range of $7.630-$7.750 billion (up from previous range of $7.440-$7.600 billion), representing year-over-year increase of 9-11%. The company expects adjusted earnings in the range of $3.49-$3.55 (up from previous range of $3.39-$3.47), an increase of 12-14% year over year.

Zacks Rank & Stocks to Consider

Currently, Amphenol has a Zacks Rank #4 (Sell).

Analog Devices (ADI - Free Report) , Micron Technologies (MU - Free Report) and Methode Electronics (MEI - Free Report) are stocks worth considering in the broader sector. While Analog Devices and Micron sport a Zacks Rank #1 (Strong Buy), Methode carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Analog Devices, Micron and Methode is currently pegged at 12%, 10% and 15%, respectively.

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