Amphenol Rises 43% in a Year: Is the Stock Still a Screaming Buy?

Amphenol APH shares have gained 42.6% in the trailing 12 months, outperforming the broader Zacks Computer & Technology sector’s return of 30.6% and the Zacks Electronics Connectors’ industry’s appreciation of 41.6%.Amphenol is benefiting from its strong portfolio of solutions, including high-technology interconnect products. Its diversified business model lowers the volatility of individual end markets and geographies.Expanding spending on both current and next-generation defense technologies bodes well for APH’s top-line growth. Apart from Defense, Amphenol’s prospects ride on strong demand for its solutions across Commercial Air, Industrial, and Mobile devices.Orders in the third quarter of 2024 were a record $4.412 billion, up 39% year over year and up 9% sequentially, resulting in a strong book-to-bill ratio of 1.09:1.One Year Performance Image Source: Zacks Investment Research These factors have helped APH outperform broader sector peers, including Methode Electronics MEI, Ambarella AMBA and Applied Materials AMAT over the same timeframe. While AMBA shares have returned 10.3%, AMAT and MEI dropped 0.1% and 45.4%, respectively.Strong Portfolio, Acquisitions Aid APH’s ProspectsAmphenol’s prospects ride on 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.Amphenol plans to expand its high-technology interconnect antenna and sensor offerings, both organically and through complementary acquisitions in the industrial domain. 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.Acquisitions have helped APH strengthen its product offerings and expand its customer base. In May, it completed the acquisition of CIT, which expanded Amphenol’s footprint across defense, commercial air and industrial end markets. The Lutze business 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. The pending DAS and OWN acquisitions will expand its footprint in the mobile networks market.Amphenol’s Outlook StrongAPH 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.For the Commercial Air market, APH expects a high single-digit increase in fourth-quarter 2024 sales. For 2024, Amphenol expects sales to increase more than 80% over 2023, driven by the addition of CIT, as well as robust organic growth.Industrial market sales are expected to grow low double digits for 2024. Mobile Devices 2024 sales are expected to increase in the high single-digit range compared with 2023. IT datacom sales are expected to grow by more than 50% over 2023.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.For 2024, Amphenol expects earnings between $1.82 and $1.84 per share, indicating growth between 21% and 22% over 2023. Revenues are anticipated between $14.85 billion and $14.95 billion, suggesting growth in the 18-19% range over 2023.APH’s Earnings Estimates Trend HigherThe Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $4.02 billion, indicating year-over-year growth of 20.69%.The consensus mark for earnings is pegged at 50 cents per share, up 8.7% over the past 60 days and indicates 21.95% growth over year-ago quarter’s reported figure.The Zacks Consensus Estimate for 2024 revenues is pegged at $14.92 billion, indicating year-over-year growth of 18.85%.The consensus mark for earnings is pegged at $1.84 per share, up 4.5% over the past 60 days and indicates 21.85% growth over 2023’s reported figure.APH’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 7.65%. Amphenol Corporation Price and Consensus Amphenol Corporation price-consensus-chart | Amphenol Corporation Quote Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Here’s Why Amphenol is a BuyAmphenol is trading at a premium, as suggested by the Value Score of D.In terms of the forward 12-month Price/Earnings, APH is trading at 32.92X, higher than the sector’s 26.84X.Price/Earnings (F12M) Image Source: Zacks Investment Research APH shares are trading above the 200-day moving average, indicating a bullish trend.APH Trades Above 200-day SMA Image Source: Zacks Investment Research Amphenol’s strong portfolio is a major driver and justifies a premium valuation.Amphenol currently sports a Zacks Rank #1 (Strong Buy), which indicates that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amphenol Corporation (APH): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report Methode Electronics, Inc. (MEI): Free Stock Analysis Report Ambarella, Inc. 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