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Amphenol (APH) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research

Amphenol Corporation APH is slated to release third-quarter 2017 results on Oct 25, before market open.

Over the last month, the company’s shares yielded a return of 5.7%, outperforming 4.9% growth recorded by the industry.



In fact, the company pulled off an average positive earnings surprise of 7.90% over the trailing four quarters.

Let’s see how things are shaping up prior to this announcement.

Factors to Play

Amphenol Corporation believes its state-of-the-art technologies, efficient management workforce and diversified business expose will likely help boost the company’s top-line performance in the upcoming quarters. Notably, strategic sensor-business buyouts from Meggitt PLC (June 2017), Intelligente Sensorsysteme acquisition (June 2017) and Telect Incorporated buyout (July 2017) are anticipated to bolster the company’s revenues in the quarters ahead. Moreover, solid mobile devices, commercial air market and automotive market sales are projected to aid the company’s revenue growth trajectory, going forward.

Amphenol Corporation anticipates to report revenues in the range of $1.70-$1.74 billion in third-quarter 2017 (estimating an year-over-year increment of 4-6%).

Furthermore, elevated revenues, a lean and highly flexible cost structure, and greater operational efficacy are estimated to drive the company’s bottom-line performance in the quarters. Notably, Amphenol Corporation projects to report earnings in the range of 77-79 cents per share in the third quarter.

However, Amphenol Corporation believes lower military market sales, and slightly lower IT and data communications sales might hurt the company’s top-line results.

We believe rising average debt levels, if not checked, might further escalate the company’s interest expense going forward. In addition, sudden input price inflation, unfavorable foreign currency translation impact or any supply chain challenge might dent the company’s near-term results.

Amphenol Corporation currently carries a favorable Zacks Rank #2 (Buy). Notably, the company’s earnings per share (EPS) is predicted to be up 10.2% in the next three to five years. Zacks Consensus Estimate for the stock is currently pegged at 79 cents per share for third-quarter 2017.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Applied Materials, Inc. AMAT currently sports a Zacks Rank #1 (Strong Buy). The company’s EPS is predicted to be up 17.1% in the next three to five years. You can see the complete list of today’s Zacks Rank #1 Rank stocks here.

Apple Inc. AAPL carries a Zacks Rank #2. Over the next three to five years, the company’s EPS is projected to be up 12%.

Agilent Technologies, Inc. A also holds a Zacks Rank #2. The company’s EPS is estimated to improve 9.8% during the same time frame

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