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Amphenol (APH) Q4 Earnings Beat, Issues Bullish View for '18

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Amphenol Corporation (APH - Free Report) reported strong fourth-quarter 2017 results with healthy year-over-year increases in both earnings and revenues.

Earnings and Revenues

Quarterly adjusted earnings came in at 86 cents per share, surpassing the Zacks Consensus Estimate of 81 cents per share. Notably, the bottom line also came in higher than the year-ago tally of 75 cents per share.

Quarterly revenues came in at $1,943.9 million, beating the Zacks Consensus Estimate of $1,791 million. Further, the top line came in higher than the prior-year figure of $1,651.1 million.

For full year 2017, Amphenol recorded GAAP earnings of $650.5 million or $2.06 per share compared with 822.9 million or $2.61 per share in 2016. Excluding non-recurring items, adjusted earnings for 2017 were $3.12 per share compared with $2.72 in 2016.

Segmental Performance

Revenues of Interconnect Products and Assemblies segment came in at $1,852.6 million, up 19.1% year over year.

However, sales of Cable Products and Solutions segment were $91.3 million, down 4.7% year over year.

Amphenol Corporation Price, Consensus and EPS Surprise

Amphenol Corporation Price, Consensus and EPS Surprise | Amphenol Corporation Quote

Costs and Margins

Cost of sales in the reported quarter came in at $1,308.5 million, up 18.4% year over year. Gross profit margin the quarter came in at 32.7%, contracting 40 basis points year over year.

Selling, general and administrative expenses flared up 14% year over year to $236 million. Operating margin in the quarter remained constant at 20.5%, in comparison with the year-over-year figure. Interest expense during the quarter was $25 million compared with $18.4 million reported in the year-earlier quarter.

Balance Sheet and Cash Flow

Exiting the quarter, Amphenol had cash and cash equivalents worth $1,719.1million, higher than $1,034.6 million recorded at the end of 2016. Long-term debt came in at $3,541.5 million, higher than $2,635.5 million recorded on Dec 31, 2016.

Cash flow from operations for 2017 reached record level of $1,144.2 million compared with $1,077.6 million in the prior-year period. Capital expenditure came in at $226.6 million, compared with $190.8 million recorded in the comparable period last year.

During the quarter, Amphenol repurchased approximately 0.7 million shares pursuant to its $1 billion two-year open market stock repurchase plan.

Outlook

The company anticipates generating first-quarter 2018 revenues within the range of $1.780-$1.820 billion. While adjusted earnings for first-quarter 2018 is predicted to lie within 78-80 cents per share.

For full-year 2018, this Zacks Rank #3 (Hold) company expects sales in the range of $7.440-$7.600 billion, representing a year-over-year increase of 6-8%. The company expects adjusted earnings per share in the range of $3.39-$3.47, an increase of 9-11% year over year.

Stocks to Consider

Some better-ranked stocks worth considering in the same space include Cray Inc (CRAY - Free Report) , Analog Devices, Inc. (ADI - Free Report) and Applied Materials, Inc. (AMAT - Free Report) . While Cray sports a Zacks Rank #1 (Strong Buy), Analog Devices and Applied Materials carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cray has a decent earnings surprise history, surpassing estimates thrice in the trailing four quarters with an average beat of 12.3%.

Analog Devices has an excellent earnings surprise history, exceeding estimates in the trailing four quarters with an average beat of 16.3%.

Applied Materials has posted earning beat in the trailing four quarters. It boasts an average beat of 2.8%.

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