Post Q3 Earnings: Is APH a Buy on Solid Communications Revenue Growth?

Barchart · 10/25 13:14

Amphenol’s APH third-quarter 2024 Communications Solutions revenues of $1.69 billion beat the Zacks Consensus Estimate by 13.51%. Communications Solutions revenues surged 31.8% year over year, accounting for 41.7% of sales in the reported quarter.

In the reported quarter, Amphenol’s adjusted earnings of 50 cents per share beat the Zacks Consensus Estimate by 11.11%. The earnings figure increased 28.2% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net sales increased 26.2% year over year to $4.04 billion, beating the consensus mark by 7.11%. Organically, net sales increased 15%.

Click here to check the details of Amphenol’s third-quarter 2024 results.
 

APH shares have returned 40.8% year to date compared with the Zacks Computer and Technology sector’s appreciation of 25.5%.

Strong Defense Sales Aid APH’s Prospects

Amphenol benefits from a diversified business model. In the reported quarter, Communications sales were driven by strong end-market performance, including Defense. Defense sales increased 16% reportedly and 8% organically in the second quarter of 2024. The end market accounted for 11% of revenues in the third quarter of 2024.

APH expects sales in the defense market to increase moderately on a sequential basis. For 2024, it expects a mid-teens increase in sales from the Defense market. This is expected to drive Communications Solutions revenues.

Amphenol’s strong portfolio of solutions, including high-technology interconnect products, is a key catalyst. Expanding spending on both current and next-generation defense technologies bodes well for APH’s top-line growth.

Strong End-Market Demand to Boost APH’s Revenues

Apart from Defense, Amphenol’s prospects ride on strong demand for its solutions across Commercial Air, Industrial, and Mobile devices.

Commercial Air accounted for 6% of third-quarter revenues. Sales surged 123% year over year and 12% organically, driven by acquisitions, including CIT. Sequentially, Commercial Air sales increased by 37%.

For the fourth quarter of 2024, Amphenol expects a high-single-digit increase in Commercial Air sales. For 2024, sales are expected to jump 80% over 2023.

Industrial accounted for 23% of third-quarter revenues. Sales increased 24% year over year on a reported basis, while the figure inched up 9% sequentially.

For 2024, Industrial sales are expected to grow in the low double digits over 2023.

Mobile Devices contributed 10% of third-quarter revenues. Sales increased 18% year over year on a reported basis, while the figure jumped 38% sequentially.

APH’s Q4 Guidance Positive

Amphenol offered encouraging guidance for fourth-quarter 2024 and full-year 2024, which is expected to push shares higher.

Amphenol expects fourth-quarter 2024 earnings between 48 cents and 50 cents per share, indicating growth between 17% and 22% year over year. Revenues are anticipated between $3.95 billion and $4.05 billion, suggesting growth in the 19-22% range.

The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $3.89 billion, suggesting a 17.03% increase year over year. The consensus estimate for earnings is pegged at 46 cents per share, unchanged over the past 30 days.

Zacks Rank & Upcoming Earnings to Watch Out

Currently, Amphenol has a Zacks Rank #2 (Buy).

Arista Networks ANET, Onto Innovation ONTO and Fortinet FTNT are some other top-ranked stocks that investors can consider in the broader sector. Each of the three stocks also carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arista Networks’ shares have appreciated 69.9% year to date. ANET is set to report its third-quarter 2024 results on Nov. 7.

Onto Innovation shares have returned 34.5% year to date. ONTO is set to report its third-quarter fiscal 2024 results on Oct. 31.

Fortinet shares are up 39.2% year to date. FTNT is set to report its third-quarter 2024 results on Nov. 7.

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Amphenol Corporation (APH): Free Stock Analysis Report
 
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