A month has gone by since the last earnings report for Amphenol (APH). Shares have lost about 3.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amphenol due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Amphenol's Q2 Earnings Beat Estimates, Revenues Down Y/Y
Amphenol’s second-quarter 2023 adjusted earnings of 72 cents per share beat the Zacks Consensus Estimate by 7.46%. The earnings figure decreased 4% year over year.
Net sales decreased 3% year over year to $3.054 billion but beat the consensus mark by 4.34%. Organically, net sales decreased 4%.
The top line suffered from lower revenues across IT datacom, mobile networks and mobile devices end markets.
Harsh Environment Solutions’ (27% of net sales) sales were $888.9 million, up 12% from the year-ago quarter’s levels.
Communications Solutions’ (37.9% of net sales) sales were $1.16 billion, down 16% year over year.
Interconnect and Sensor Systems Solutions’ (33.4% of net sales) sales were $1 billion, up 4% year over year.
Gross margin, on a GAAP basis, expanded 50 basis points (bps) year over year to 32.5%.
Selling, general and administrative expenses, as a percentage of revenues, increased 70 bps on a year-over-year basis to 12%.
Adjusted operating margin contracted 40 bps on a year-over-year basis to 20.3%.
As of Jun 30, 2023, Amphenol had cash and cash equivalents worth $1.50 billion, unchanged sequentially.
Total debt was $4.32 billion as of Jun 30, 2023 compared with $4.56 billion as of Mar 31, 2023.
During the quarter, the company purchased 2 million shares for $154 million. It also paid dividends of $125 million.
Amphenol expects third-quarter 2023 earnings between 72 cents and 74 cents per share, indicating a decline between 8% and 10% year over year. Revenues are anticipated between $3.040 billion and $3.1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
At this time, Amphenol has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Amphenol has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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