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Post Q3 Earnings: Is APH a Buy on Solid Communications Revenue Growth?
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Amphenol’s (APH - Free Report) third-quarter 2024 Communications Solutions revenues of $1.69 billion beat the Zacks Consensus Estimate by 13.51%. Communications Solutions revenues surged 31.8% year over year, accounting for 41.7% of sales in the reported quarter.
In the reported quarter, Amphenol’s adjusted earnings of 50 cents per share beat the Zacks Consensus Estimate by 11.11%. The earnings figure increased 28.2% year over year.
APH shares have returned 40.8% year to date compared with the Zacks Computer and Technology sector’s appreciation of 25.5%.
Strong Defense Sales Aid APH’s Prospects
Amphenol benefits from a diversified business model. In the reported quarter, Communications sales were driven by strong end-market performance, including Defense. Defense sales increased 16% reportedly and 8% organically in the second quarter of 2024. The end market accounted for 11% of revenues in the third quarter of 2024.
APH expects sales in the defense market to increase moderately on a sequential basis. For 2024, it expects a mid-teens increase in sales from the Defense market. This is expected to drive Communications Solutions revenues.
Amphenol’s strong portfolio of solutions, including high-technology interconnect products, is a key catalyst. Expanding spending on both current and next-generation defense technologies bodes well for APH’s top-line growth.
Strong End-Market Demand to Boost APH’s Revenues
Apart from Defense, Amphenol’s prospects ride on strong demand for its solutions across Commercial Air, Industrial, and Mobile devices.
Commercial Air accounted for 6% of third-quarter revenues. Sales surged 123% year over year and 12% organically, driven by acquisitions, including CIT. Sequentially, Commercial Air sales increased by 37%.
For the fourth quarter of 2024, Amphenol expects a high-single-digit increase in Commercial Air sales. For 2024, sales are expected to jump 80% over 2023.
Industrial accounted for 23% of third-quarter revenues. Sales increased 24% year over year on a reported basis, while the figure inched up 9% sequentially.
For 2024, Industrial sales are expected to grow in the low double digits over 2023.
Mobile Devices contributed 10% of third-quarter revenues. Sales increased 18% year over year on a reported basis, while the figure jumped 38% sequentially.
APH’s Q4 Guidance Positive
Amphenol offered encouraging guidance for fourth-quarter 2024 and full-year 2024, which is expected to push shares higher.
Amphenol expects fourth-quarter 2024 earnings between 48 cents and 50 cents per share, indicating growth between 17% and 22% year over year. Revenues are anticipated between $3.95 billion and $4.05 billion, suggesting growth in the 19-22% range.
The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $3.89 billion, suggesting a 17.03% increase year over year. The consensus estimate for earnings is pegged at 46 cents per share, unchanged over the past 30 days.
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Post Q3 Earnings: Is APH a Buy on Solid Communications Revenue Growth?
Amphenol’s (APH - Free Report) third-quarter 2024 Communications Solutions revenues of $1.69 billion beat the Zacks Consensus Estimate by 13.51%. Communications Solutions revenues surged 31.8% year over year, accounting for 41.7% of sales in the reported quarter.
In the reported quarter, Amphenol’s adjusted earnings of 50 cents per share beat the Zacks Consensus Estimate by 11.11%. The earnings figure increased 28.2% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales increased 26.2% year over year to $4.04 billion, beating the consensus mark by 7.11%. Organically, net sales increased 15%.
Click here to check the details of Amphenol’s third-quarter 2024 results.
Amphenol Corporation Revenue (TTM)
Amphenol Corporation revenue-ttm | Amphenol Corporation Quote
APH shares have returned 40.8% year to date compared with the Zacks Computer and Technology sector’s appreciation of 25.5%.
Strong Defense Sales Aid APH’s Prospects
Amphenol benefits from a diversified business model. In the reported quarter, Communications sales were driven by strong end-market performance, including Defense. Defense sales increased 16% reportedly and 8% organically in the second quarter of 2024. The end market accounted for 11% of revenues in the third quarter of 2024.
APH expects sales in the defense market to increase moderately on a sequential basis. For 2024, it expects a mid-teens increase in sales from the Defense market. This is expected to drive Communications Solutions revenues.
Amphenol’s strong portfolio of solutions, including high-technology interconnect products, is a key catalyst. Expanding spending on both current and next-generation defense technologies bodes well for APH’s top-line growth.
Strong End-Market Demand to Boost APH’s Revenues
Apart from Defense, Amphenol’s prospects ride on strong demand for its solutions across Commercial Air, Industrial, and Mobile devices.
Commercial Air accounted for 6% of third-quarter revenues. Sales surged 123% year over year and 12% organically, driven by acquisitions, including CIT. Sequentially, Commercial Air sales increased by 37%.
For the fourth quarter of 2024, Amphenol expects a high-single-digit increase in Commercial Air sales. For 2024, sales are expected to jump 80% over 2023.
Industrial accounted for 23% of third-quarter revenues. Sales increased 24% year over year on a reported basis, while the figure inched up 9% sequentially.
For 2024, Industrial sales are expected to grow in the low double digits over 2023.
Mobile Devices contributed 10% of third-quarter revenues. Sales increased 18% year over year on a reported basis, while the figure jumped 38% sequentially.
APH’s Q4 Guidance Positive
Amphenol offered encouraging guidance for fourth-quarter 2024 and full-year 2024, which is expected to push shares higher.
Amphenol expects fourth-quarter 2024 earnings between 48 cents and 50 cents per share, indicating growth between 17% and 22% year over year. Revenues are anticipated between $3.95 billion and $4.05 billion, suggesting growth in the 19-22% range.
The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $3.89 billion, suggesting a 17.03% increase year over year. The consensus estimate for earnings is pegged at 46 cents per share, unchanged over the past 30 days.
Zacks Rank & Upcoming Earnings to Watch Out
Currently, Amphenol has a Zacks Rank #2 (Buy).
Arista Networks (ANET - Free Report) , Onto Innovation (ONTO - Free Report) and Fortinet (FTNT - Free Report) are some other top-ranked stocks that investors can consider in the broader sector. Each of the three stocks also carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks’ shares have appreciated 69.9% year to date. ANET is set to report its third-quarter 2024 results on Nov. 7.
Onto Innovation shares have returned 34.5% year to date. ONTO is set to report its third-quarter fiscal 2024 results on Oct. 31.
Fortinet shares are up 39.2% year to date. FTNT is set to report its third-quarter 2024 results on Nov. 7.