A month has gone by since the last earnings report for Amphenol (APH - Free Report) . Shares have added about 7.4% 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 Q1 Earnings Lag Estimates, Revenues Decline Y/Y
Amphenol’s first-quarter 2020 adjusted earnings of 71 cents per share missed the Zacks Consensus Estimate by 5.3% and also declined 20.2% from the year-ago quarter’s figure.
Although net sales decreased 4.9% year over year to $1.86 billion, the same was slightly better than the consensus mark of $1.85 billion. Unfavorable foreign exchange impacted sales by $19 million.
Topline was negatively impacted by production shutdown in China during February and production limitations imposed on other parts of the world in March.
Orders were worth $2.150 billion, which resulted in a book-to-bill ratio of 1.15:1.
Interconnect Products and Assemblies (95.5% of net sales) sales dipped 4.5% from the year-ago quarter to $1.78 billion. Moreover, Cable Products and Solutions sales were $83 million, down 13.4% year over year.
Gross margin contracted 200 basis points (bps) on a year-over-year basis to 30.1%.
Selling, general and administrative expenses (SG&A) as a percentage of revenues increased 100 bps on a year-over-year basis to 13%.
Adjusted operating margin contracted 300 bps on a year-over-year basis to 17%.
Segment wise, Interconnect Products and Assemblies’ operating margin shrank 290 bps on a year-over-year basis to 19.1% while Cable Products and Solutions’ operating margin contracted 340 bps to 7.6%.
Balance Sheet and Cash Flow
As of Mar 31, 2020, Amphenol had cash and cash equivalents worth $2.38 billion, higher than $908.6 million as of Dec 31, 2019.
Cash flow from operations was $384.3 million compared with $424 million in the previous quarter.
During the quarter, the company repurchased shares worth $257 million and paid roughly $74 million in dividends.
Amphenol expects second-quarter earnings and revenues to decline on a sequential basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.31% due to these changes.
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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amphenol has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.