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Amphenol (APH) Down 2.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Amphenol (APH - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amphenol due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
Amphenol Corporation delivered second-quarter 2018 adjusted earnings of 90 cents per share that beat the Zacks Consensus Estimate of 85 cents and increased 21.6% from the year-ago quarter.
Net sales increased 18.9% year over year to $1.981 billion, which comfortably surpassed the Zacks Consensus Estimate of $1.881 billion. Favorable currency exchange rate contributed $40 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. Management is also optimistic about its acquisition programs.
Interconnect Products and Assemblies (94.4% of net sales) revenues increased 19.9% from the year-ago quarter to $1.870 billion. Moreover, Cable Products and Solutions sales were $111.2 million, up 3.7% year over year.
Operating Details
Gross margin contracted 190 basis points (bps) from the year-ago quarter to 32.5%.
Non-GAAP operating margin however expanded 20 bps on a year-over-year basis to 20.6%, driven by improved operational efficiency.
Reported segment wise, Interconnect Products and Assemblies operating margin increased 10 bps to 22.4%. However, Cable Products and Solutions operating margin declined 170 bps to 13.2%.
Balance Sheet and Cash Flow
As of Jun 30, 2018, Amphenol had cash and cash equivalents worth $964.4 million, lower than $1.02 billion as of Mar 31, 2018.
Cash flow from operations was $395.3 million at the end of the second quarter.
During the quarter, the company repurchased approximately 3.1 million shares under the company’s $2 billion open market stock repurchase plan spanning three years.
The company paid dividends of $115.5 million during the quarter.
Guidance
Management is positive about the healthy demand environment across its end markets. However, uncertainties related to global trade policies might turn out to be a negative.
For the third quarter, Amphenol projects sales between $1.980 billion and $2.020 billion. Adjusted earnings are expected between 91 cents and 93 cents per share.
For full-year 2018, Amphenol now expects sales in the range of $7.820-$7.900 billion (up from the previous range of $7.630-$7.750 billion), indicating year-over-year increase of 12-13%. The company expects adjusted earnings in the range of $3.57-$3.61 (up from previous range of $3.49-$3.55), an increase of 14-16% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Amphenol has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise Amphenol has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Amphenol (APH) Down 2.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Amphenol (APH - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amphenol due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
Amphenol Corporation delivered second-quarter 2018 adjusted earnings of 90 cents per share that beat the Zacks Consensus Estimate of 85 cents and increased 21.6% from the year-ago quarter.
Net sales increased 18.9% year over year to $1.981 billion, which comfortably surpassed the Zacks Consensus Estimate of $1.881 billion. Favorable currency exchange rate contributed $40 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. Management is also optimistic about its acquisition programs.
Interconnect Products and Assemblies (94.4% of net sales) revenues increased 19.9% from the year-ago quarter to $1.870 billion. Moreover, Cable Products and Solutions sales were $111.2 million, up 3.7% year over year.
Operating Details
Gross margin contracted 190 basis points (bps) from the year-ago quarter to 32.5%.
Non-GAAP operating margin however expanded 20 bps on a year-over-year basis to 20.6%, driven by improved operational efficiency.
Reported segment wise, Interconnect Products and Assemblies operating margin increased 10 bps to 22.4%. However, Cable Products and Solutions operating margin declined 170 bps to 13.2%.
Balance Sheet and Cash Flow
As of Jun 30, 2018, Amphenol had cash and cash equivalents worth $964.4 million, lower than $1.02 billion as of Mar 31, 2018.
Cash flow from operations was $395.3 million at the end of the second quarter.
During the quarter, the company repurchased approximately 3.1 million shares under the company’s $2 billion open market stock repurchase plan spanning three years.
The company paid dividends of $115.5 million during the quarter.
Guidance
Management is positive about the healthy demand environment across its end markets. However, uncertainties related to global trade policies might turn out to be a negative.
For the third quarter, Amphenol projects sales between $1.980 billion and $2.020 billion. Adjusted earnings are expected between 91 cents and 93 cents per share.
For full-year 2018, Amphenol now expects sales in the range of $7.820-$7.900 billion (up from the previous range of $7.630-$7.750 billion), indicating year-over-year increase of 12-13%. The company expects adjusted earnings in the range of $3.57-$3.61 (up from previous range of $3.49-$3.55), an increase of 14-16% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Amphenol has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise Amphenol has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.