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Factors to Consider Ahead of Amphenol's (APH) Q1 Earnings

Zacks Equity Research

Amphenol APH is set to report first-quarter 2019 results on Apr 24.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.3%.

In the last reported quarter, Amphenol benefited from strong organic growth across most of its end markets, including mobile devices, military, IT and data communications, mobile networks, commercial air and broadband.

First-Quarter Sales Expected to Decline

Amphenol expects first-quarter sales to be negatively impacted by global economic uncertainties related to trade policy and weakness in the mobile devices end market. The company anticipates sales from mobile devices end market to decline roughly 50% sequentially.

Amphenol Corporation Price and EPS Surprise

Amphenol Corporation Price and EPS Surprise | Amphenol Corporation Quote

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Further, challenging IT and data communications end market is likely to hurt growth. Management anticipates a low-double-digit decline sequentially on lower demand.

Amphenol projects sales between $1.898 billion and $1.938 billion. The Zacks Consensus Estimate for revenues is $1.94 billion, up almost 4% year over year.

Moreover, adjusted earnings are expected between 86 cents and 88 cents per share. The consensus mark for earnings is unchanged at 88 cents over the past 30 days.

Portfolio Strength & Acquisitions to Drive Growth

Amphenol’s diversified end market, which lowers exposure to volatility of any industry, is a positive. Notably, in 2018, no market contributed more than 19% to the company’s sales.

Moreover, Amphenol has been a frequent acquirer. The company’s buyouts of CTI, Ardent and All Sensors (in 2018), and SSI Controls (in January 2019) have not only strengthened its connector and sensor products portfolio but also expanded consumer base. This has also helped the company fast penetrate the industrial end market.

The addition of SSI is expected to modestly boost industrial end-market sales on a sequential basis. Furthermore, growing sensor offerings (post SSI acquisition) are anticipated to drive automotive end-market sales that accounted for 18% of total sales in 2018.

Further, Amphenol is expected to benefit from strong defense spending environment that is positively impacting the military end market. Sales are expected to grow modestly on a sequential basis in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Amphenol has a Zacks Rank #3 and an Earnings ESP of +2.08%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are a few other companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:

Gogo GOGO has an Earnings ESP of +7.99% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Acacia Communications ACIA has a Zacks Rank #2 and an Earnings ESP of +5.73%.

Juniper Networks JNPR has a Zacks Rank #2 and an Earnings ESP of +10.00%.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

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