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Why Is Amphenol (APH) Down 1% Since Last Earnings Report?

It has been about a month since the last earnings report for Amphenol (APH). Shares have lost about 1% in that time frame, outperforming 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 Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Amphenol’s fourth-quarter 2022 adjusted earnings of 78 cents per share beat the Zacks Consensus Estimate by 4%. The earnings figure increased 11.4% year over year.

Net sales increased 7% year over year to $3.24 billion and beat the consensus mark by 3.6%. Organically, net sales increased 8%.

The top line benefited from robust growth across broadband communications, commercial air, automotive and military markets, and moderate growth in the industrial market.

Quarterly Details

Harsh Environment solutions’ (24.6% of net sales) sales were $795.4 million, up 10.3% from the year-ago quarter.

Communications Solutions’ (44.3% of net sales) sales were $1.44 billion, up 1.3% year over year.

Interconnect and Sensor Systems Solutions’ (31.1% of net sales) sales were $1 billion, up 13.5% year over year.

The gross margin, on a GAAP basis, expanded 90 basis points (bps) year over year to 32%.

Selling, general and administrative expenses (SG&A), as a percentage of revenues, increased 20 bps on a year-over-year basis to 11.2%.

The adjusted operating margin expanded 80 bps on a year-over-year basis to 20.9%.

Balance Sheet

As of Dec 31, 2022, Amphenol had cash and cash equivalents worth $1.43 billion, higher than $1.25 billion as of Sep 30, 2022.

Total debt was $4.58 billion as of Dec 31, 2022, compared with $4.75 billion as of Sep 30, 2022.

In the quarter, the company purchased 2.3 million shares for $170 million. Amphenol also paid out dividends of $119 million.

Acquisitions

Amphenol acquired the North American cable and global base station antenna businesses of RFS in late December 2022.

Amphenol announced the acquisition of Control Measure Regulation Group (CMR) this month.

Based in France and with facilities located in Tunisia, China and India, CMR manufactures cable assemblies and complex interconnect assemblies for the industrial market, particularly for heavy vehicle engine applications.

CMR has annual sales of approximately $75 million.

Guidance

Amphenol expects first-quarter 2023 earnings between 65 cents and 67 cents per share, down 3% to flat year over year. Revenues are anticipated between $2.840 billion and $2.900 billion, indicating a 2-4% year-over-year decline.

Amphenol anticipates the acquired businesses to generate sales of $100 million in 2023.

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How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Amphenol has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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