Shares of Amphenol Corporation (APH) hit a 52-week high of $86.31 during the trading session on Dec 6. However, the stock closed the session at $86.11, which reflects a solid year-to-date return of 26.5%. The average trading volume aggregated 558,102 shares.
Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has enough fundamentals that may further drive the stock upward. Its recent acquisition of General Electric Company’s (GE) Advanced Sensor business and long-term earnings growth of 4.5% for 2013 are some catalysts driving the stock.
Impressive third-quarter 2013 results that comprised higher sales across its businesses, top-line growth and new electronic product rollouts were the primary driving factors for APH.
On Oct 17, APH reported net income for the third quarter at $160.8 million or 99 cents per share compared with $147.4 million or 90 cents in the year-ago quarter
The company’s top-line growth is benefiting from improved end-market demand, new product rollouts, and market share gains. Demand continues to be strong in Aerospace, Industrial and Broadband Communications. Amphenol aims to diligently focus on its market and geographic diversification strategy along with a strong commitment to develop enabling technologies for its customers in all markets through both organic and inorganic measures.
In addition, Amphenol is bullish about the accelerating proliferation of new electronic products in most of its end markets, which it expects to propel demand with time.
This apart, the company recently entered into an agreement to acquire the Advanced Sensors business of General Electric for approximately $318 million. The strategic move is aimed to deliver value-added solutions to Amphenol’s customers across a wide range of end markets. The sensor and sensor-based product offerings complement Amphenol’s core interconnect offerings and is expected to deliver long-term expansion opportunity. The experienced management team of Advanced Sensors and the strong operating discipline of Amphenol are expected to be beneficial for both the companies. This acquisition is expected to close by the end of 2013 and is expected to be accretive to earnings in the first year itself.
Over the last 30 days, 2013 estimates have remained unchanged at $3.78 per share. However, for 2014, 1 out of 9 estimates has moved upward, helping the Zacks Consensus Estimate advance 0.2% to $4.19 per share.
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Amphenol serves a variety of end markets, the diversification of which enables it to post strong results. A sustained drive for diversification has enabled Amphenol to further expand its market share into new markets and new customers, and innovate new applications.