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The momentum in APH shares can be attributed to its strong first-half 2024 results. Net sales grew 9% year over year organically and 15% at constant currency, driven by strong organic growth in key end markets, including IT datacom, commercial aerospace, automotive and defense markets, and moderate improvement in the mobile devices market, along with contributions from APH’s acquisition program.
Amphenol achieved record orders of $4.061 billion in second-quarter 2024, up 33% year over year and 21% on a sequential basis. APH saw strong bookings from IT datacom customers focused on AI. This strong performance resulted in a solid book-to-bill ratio of 1.12:1.
APH also raised the dividend payout by 50% to 16.5 cents per share, indicating strong liquidity. As of June 30, 2024, it had cash and cash equivalents worth $1.3 billion. In the first half of 2024, net cash flow increased 18.2% from the year-ago period to $1.26 billion.
Does APH’s robust portfolio, acquisitions and strong liquidity make the stock attractive? Let us analyze.
APH’s Q3 Outlook Looks Promising
Amphenol expects third-quarter 2024 adjusted earnings between 43 cents and 45 cents per share, indicating growth between 10% and 15% on a year-over-year basis.
Net sales are anticipated between $3.7 billion and $3.8 billion, indicating growth between 16% and 19% on a year-over-year basis.
The Zacks Consensus Estimate for third-quarter 2024 net sales is pegged at $3.77 billion, suggesting growth of 17.86% over the figure reported in the year-ago quarter.
The consensus mark for third-quarter 2024 earnings is pegged at 45 cents per share, unchanged over the past 30 days. The estimate indicates growth of 15.38% over the figure reported in the year-ago quarter.
Defense, Commercial Aerospace to Aid APH’s Q3 Sales
In terms of end-market, APH expects defense market sales (11% of second-quarter sales) to increase in the mid-single-digit range sequentially, including the benefit of acquisitions (like CIT) and a strong portfolio of high-technology interconnect products.
Commercial aerospace (5% of second-quarter net sales) sales are expected to increase in the mid-40% for third-quarter 2024, driven by the addition of a full quarter of CIT revenues.
Industrial sales (24% of second-quarter sales) are expected to grow in the mid-single-digit range sequentially. Acquisitions, including those of CIT and Lutze US, have expanded Amphenol’s footprint in this end market.
Mobile devices (8% of second-quarter sales) sales are anticipated to increase 20% sequentially. IT datacom (24% of second-quarter sales) sales are expected to grow modestly on a sequential basis.
Factors to Drive APH Stock
Amphenol’s diversified business model lowers the volatility of individual end markets and geographies. Its wide array of interconnect and sensor products boosts long-term prospects.
Acquisitions are helping Amphenol expand its position across a broad array of technologies and markets. In May, APH completed the acquisition of CIT, which expanded its footprint across defense, commercial air and industrial end markets.
The company completed the acquisition of Lutze US in May and expects to close Lutze Europe by the end of third-quarter 2024. On a combined basis, the Lutze business generates $175 million in annual sales. This acquisition strengthens APH’s broad offering of high-technology interconnect products for industrial markets and expands the range of value-added interconnect products.
The recently announced acquisition of CommScope’s Outdoor Wireless Networks (OWN) and Distributed Antenna Systems (DAS) businesses expands Amphenol’s footprint in the areas of base station antennas and related interconnect solutions, as well as distributed antenna systems. These businesses are expected to generate revenues of $1.2 billion, with an EBITDA margin of 25% in 2024.
Amphenol’s long-term prospects benefit strong spending by countries around next-generation defense technologies. Strong demand for jet-liners and next-gen aircraft is bullish for the commercial aerospace segment.
APH plans to expand its high-technology interconnect antenna and sensor offerings, both organically and through complementary acquisitions in the industrial domain. The pending DAS and OWN acquisitions will expand its footprint in the mobile networks market.
Amphenol’s solutions are critical for both high-speed power and fiber optic interconnect solutions. The growing use of AI and machine learning is driving these technologies, benefiting APH’s long-term prospects in the IT datacom end market.
These factors bode well for Amphenol’s top-line growth over the long term. Its strong cash flow generating ability is noteworthy. Amphenol expects to deliver a strong cash flow in the near term despite a slight rise in capital expenditure as it increases spending on defense and IT datacom markets.
Amphenol Trades at Premium
Amphenol’s Value Score of D suggests a stretched valuation at this moment.
In terms of forward P/E, APH is currently trading at 32.58X higher than the broader sector’s 26.07X.
Zacks Rank & Key Picks
Amphenol currently has a Zacks Rank #3 (Hold), which implies that investors should wait for better entry points in the stock.
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Amphenol Rises 28% Year to Date: How Should You Play the Stock?
Amphenol (APH - Free Report) shares have gained 27.6% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s appreciation of 19.9% and the Zacks Electronics – Connectors industry’s return of 27.3%.
The momentum in APH shares can be attributed to its strong first-half 2024 results. Net sales grew 9% year over year organically and 15% at constant currency, driven by strong organic growth in key end markets, including IT datacom, commercial aerospace, automotive and defense markets, and moderate improvement in the mobile devices market, along with contributions from APH’s acquisition program.
Amphenol achieved record orders of $4.061 billion in second-quarter 2024, up 33% year over year and 21% on a sequential basis. APH saw strong bookings from IT datacom customers focused on AI. This strong performance resulted in a solid book-to-bill ratio of 1.12:1.
APH also raised the dividend payout by 50% to 16.5 cents per share, indicating strong liquidity. As of June 30, 2024, it had cash and cash equivalents worth $1.3 billion. In the first half of 2024, net cash flow increased 18.2% from the year-ago period to $1.26 billion.
Amphenol Corporation Price and Consensus
Amphenol Corporation price-consensus-chart | Amphenol Corporation Quote
Does APH’s robust portfolio, acquisitions and strong liquidity make the stock attractive? Let us analyze.
APH’s Q3 Outlook Looks Promising
Amphenol expects third-quarter 2024 adjusted earnings between 43 cents and 45 cents per share, indicating growth between 10% and 15% on a year-over-year basis.
Net sales are anticipated between $3.7 billion and $3.8 billion, indicating growth between 16% and 19% on a year-over-year basis.
The Zacks Consensus Estimate for third-quarter 2024 net sales is pegged at $3.77 billion, suggesting growth of 17.86% over the figure reported in the year-ago quarter.
The consensus mark for third-quarter 2024 earnings is pegged at 45 cents per share, unchanged over the past 30 days. The estimate indicates growth of 15.38% over the figure reported in the year-ago quarter.
Defense, Commercial Aerospace to Aid APH’s Q3 Sales
In terms of end-market, APH expects defense market sales (11% of second-quarter sales) to increase in the mid-single-digit range sequentially, including the benefit of acquisitions (like CIT) and a strong portfolio of high-technology interconnect products.
Commercial aerospace (5% of second-quarter net sales) sales are expected to increase in the mid-40% for third-quarter 2024, driven by the addition of a full quarter of CIT revenues.
Industrial sales (24% of second-quarter sales) are expected to grow in the mid-single-digit range sequentially. Acquisitions, including those of CIT and Lutze US, have expanded Amphenol’s footprint in this end market.
Mobile devices (8% of second-quarter sales) sales are anticipated to increase 20% sequentially. IT datacom (24% of second-quarter sales) sales are expected to grow modestly on a sequential basis.
Factors to Drive APH Stock
Amphenol’s diversified business model lowers the volatility of individual end markets and geographies. Its wide array of interconnect and sensor products boosts long-term prospects.
Acquisitions are helping Amphenol expand its position across a broad array of technologies and markets. In May, APH completed the acquisition of CIT, which expanded its footprint across defense, commercial air and industrial end markets.
The company completed the acquisition of Lutze US in May and expects to close Lutze Europe by the end of third-quarter 2024. On a combined basis, the Lutze business generates $175 million in annual sales. This acquisition strengthens APH’s broad offering of high-technology interconnect products for industrial markets and expands the range of value-added interconnect products.
The recently announced acquisition of CommScope’s Outdoor Wireless Networks (OWN) and Distributed Antenna Systems (DAS) businesses expands Amphenol’s footprint in the areas of base station antennas and related interconnect solutions, as well as distributed antenna systems. These businesses are expected to generate revenues of $1.2 billion, with an EBITDA margin of 25% in 2024.
Amphenol’s long-term prospects benefit strong spending by countries around next-generation defense technologies. Strong demand for jet-liners and next-gen aircraft is bullish for the commercial aerospace segment.
APH plans to expand its high-technology interconnect antenna and sensor offerings, both organically and through complementary acquisitions in the industrial domain. The pending DAS and OWN acquisitions will expand its footprint in the mobile networks market.
Amphenol’s solutions are critical for both high-speed power and fiber optic interconnect solutions. The growing use of AI and machine learning is driving these technologies, benefiting APH’s long-term prospects in the IT datacom end market.
These factors bode well for Amphenol’s top-line growth over the long term. Its strong cash flow generating ability is noteworthy. Amphenol expects to deliver a strong cash flow in the near term despite a slight rise in capital expenditure as it increases spending on defense and IT datacom markets.
Amphenol Trades at Premium
Amphenol’s Value Score of D suggests a stretched valuation at this moment.
In terms of forward P/E, APH is currently trading at 32.58X higher than the broader sector’s 26.07X.
Zacks Rank & Key Picks
Amphenol currently has a Zacks Rank #3 (Hold), which implies that investors should wait for better entry points in the stock.
AudioEye (AEYE - Free Report) , Aspen Technology (AZPN - Free Report) , and Fortinet (FTNT - Free Report) are a few better-ranked stocks in the broader sector. Each of these stocks currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rates for AudioEye, Aspen Technology and Fortinet are pegged at 25%, 13.12%, and 16.25%, respectively.