Amphenol APH is set to report its fourth-quarter 2024 results on Jan. 22.

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The company expects fourth-quarter 2024 earnings between 48 cents and 45 cents per share, indicating growth of 17-22% year over year. 

The Zacks Consensus Estimate for fourth-quarter earnings has been steady at 50 cents per share over the past 30 days, suggesting 21.95% growth from the figure reported in the year-ago quarter.

Amphenol’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.65%.

Let’s see how things have shaped up for the upcoming announcement.

APH’s Q4 Revenues to Grow Y/Y

Amphenol expects fourth-quarter 2024 revenues between $3.95 billion and $4.05 billion. 

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $4.03 billion, indicating an increase of 21.26% from the figure reported in the year-ago quarter.

Amphenol’s to-be-reported quarter results are expected to benefit from a robust order backlog, strong sales growth driven by acquisitions, and increased demand for the company’s solutions in the defense and commercial aerospace sectors.

APH reported record orders of $4.412 billion in the third quarter of 2024, resulting in a robust book-to-bill ratio of 1.09:1. This strong order backlog is likely to contribute positively to sales in the to-be-reported quarter.

For fourth-quarter 2024, APH expects sales in the defense market to increase moderately on a sequential basis. Commercial Air sales are expected to grow in the high single digits.

APH’s Q4 Results to Ride on Acquisitions

Acquisitions have expanded its high technology and value-added interconnect product offerings to end markets, including defense, commercial aerospace and industrial product offerings. Top-line growth is expected to be reflected by this trend.

Strong contributions from the acquisitions, including CIT (Carlisle Interconnect Technologies) and Lutze US, are expected to enhance Amphenol’s product offerings and sales capabilities in the next quarter, especially in high-technology interconnect products.

APH’s growth prospects are also bolstered by strong demand for AI technologies in the IT datacom market and increased investments in the defense sector. This trend is likely to have boosted the company’s top line during the fourth quarter.

APH Shares Beat Sector, Industry

Amphenol shares have jumped 41.7% on a trailing 12-month basis, outperforming the Zacks Electronics Connectors industry’s return of 40.7% and the Zacks Computer and Technology sector’s appreciation of 27.8%.

APH has also outperformed broader sector peers including Methode Electronics MEI, Ambarella AMBA and Applied Materials AMAT over the same timeframe. While AMBA and AMAT shares have returned 41.8% and 14.1%, respectively, MEI has dropped 44.5%.

APH Performance Chart

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However, APH stock 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 31.88X, higher than the sector’s 27.01X.

Price/Earnings (F12M)

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Strong Portfolio, Acquisitions Aid APH’s Prospects

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.

Amphenol’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. The CIT acquisition 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 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.

Here’s Why Amphenol is a Buy

Amphenol’s strong portfolio is a major driver and justifies a premium valuation. Its diversified business model lowers the volatility of individual end markets and geographies. 

APH’s solid liquidity makes the stock attractive for investors. Strong cash flow generating ability is noteworthy as APH repurchased 2.7 million shares for $176 million paid dividends worth $132 million in third-quarter 2024. As of Sept. 30, 2024, total liquidity was $4.6 billion.

APH shares are trading above the 200-day moving average, indicating a bullish trend.

APH Trades Above 200-Day SMA

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Amphenol currently has a Zacks Rank #2 (Buy) and a Growth Score of B, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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