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Amphenol (APH) Up 6.4% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Amphenol Corporation (APH - Free Report) . Shares have added about 6.4% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is APH 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.

Recent Earnings

Amphenol 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%.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.

Amphenol Corporation Price and Consensus

 

Amphenol Corporation Price and Consensus | Amphenol Corporation Quote

VGM Scores

At this time, APH has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. The stock was also 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.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, APH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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