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Why Is Amphenol (APH) Up 5.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Amphenol (APH - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Amphenol due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Amphenol Q2 Earnings Beat Estimates, Revenues Rise Y/Y

Amphenol's second-quarter 2021 adjusted earnings of 61 cents per share beat the Zacks Consensus Estimate by 10.9%. The figure increased 53% year over year.

Net sales increased 34% year over year to $2.654 billion and beat the consensus mark by 7.6%. Organically, net sales increased 22%.

The top line benefited from robust growth in the automotive, industrial, military, and broadband end-markets.

Quarterly Details

Interconnect Products and Assemblies’ (95.8% of net sales) sales were up 33.9% from the year-ago quarter to $2.54 billion. Cable Products and Solutions sales were $112.6 million, up 26.5% year over year.

Gross margin, on a GAAP basis, expanded 140 basis points (bps) to 39.6% year over year.

Selling, general and administrative expenses (SG&A) as a percentage of revenues decreased 70 bps on a year-over-year basis to 11.7%.

Adjusted operating margin expanded 200 bps on a year-over-year basis to 20%.

Balance Sheet and Acquisition

As of Jun 30, 2021, Amphenol had cash and cash equivalents worth $1.24 billion, higher than $2.32 billion as of Mar 31, 2021.

Total debt was $5.24 billion as of Jun 30, 2021.

During the quarter, the company purchased 2.5 million shares for $167 million. Amphenol also paid dividends of $87 million, resulting in total capital returned to shareholders during the second quarter being $254 million.

Amphenol announced the acquisition of Unlimited Services of Wisconsin during the quarter, which was completed in late April.

Guidance

Amphenol expects third-quarter 2021 earnings between 60 cents and 62 cents per share, indicating 9% to 13% year-over-year growth. Revenues are anticipated between $2.640 and $2.700 billion, indicating 14-16% year-over-year growth.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 7.02% due to these changes.

VGM Scores

Currently, Amphenol has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

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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