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Can Amphenol (APH) Keep its Earnings Streak Alive in Q3?

Zacks

Diversified electronics manufacturer Amphenol Corporation APH is scheduled to report third-quarter 2016 results before the opening bell on Oct 19. In the last reported quarter, earnings exceeded the Zacks Consensus Estimate by a couple of cents. Amphenol has beaten the earnings estimates consecutively in the last three quarters with an average positive earnings surprise of 3.8% over the trailing four quarters. Let's see how things are shaping up for the upcoming results.

Key Factors in the Third Quarter

During third quarter, Amphenol acquired two companies, AUXEL FTG (Auxel) and Custom Cable, as part of its strategic acquisition program. Based in France, Auxel is a leading manufacturer of power busbars and power interconnect solutions worldwide. The company has annual sales of approximately $50 million. On the other hand, Custom Cable is a Florida-based firm with annual sales of approximately $30 million, offering fiber optic and copper cable assemblies.

Amphenol expects these acquisitions to strengthen its global foothold and augment its revenues. The complimentary product portfolio of both the companies is anticipated to enrich the service offerings of Amphenol and enable it to better serve its customers in various end markets.

AMPHENOL CORP-A Price and EPS Surprise

AMPHENOL CORP-A Price and EPS Surprise | AMPHENOL CORP-A Quote


Amphenol remains encouraged by its expanding presence in the fast-growing commercial aerospace market and is well positioned to capitalize on the proliferation of electronics content on next-generation products. These advanced electronic systems require advanced technology interconnect solutions to enhance fuel efficiency and improve passenger experience, all of which create excellent opportunities for Amphenol.

Amphenol’s top-line growth is also expected to benefit from an improved end-market demand, new product rollouts, and market share gains. Demand continues to be strong in automotive industrial, mobile networks and military markets. The diversification in end markets with a consistent focus on technology innovation and customer support through all phases of the economic cycle is likely to help the company achieve solid top-line growth.

Earnings Whispers

Our proven model conclusively shows that Amphenol is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is perfectly the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at +1.47%.

Zacks Rank: Amphenol’s Zacks Rank #2 when combined with a positive ESP makes an earnings beat likely this quarter. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

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

Amazon.com, Inc. AMZN, with an Earnings ESP of +6.98% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Johnson & Johnson JNJ, with an Earnings ESP of +4.24% and a Zacks Rank #3.

Synovus Financial Corporation SNV, with an Earnings ESP of +2.00% and a Zacks Rank #3.

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