Amphenol Corporation Stock Pops to Record High on Q3 Results

Amphenol Corporation: One of Wall Street’s Best Growth Stories

Amphenol Corporation (NYSE:APH) is an oft-overlooked tech stock with one of the most consistent growth trajectories on Wall Street. Since the start of the new millennium, Amphenol stock has soared 3,025%, for an annual compound growth rate of 18.78%.

Since March, APH stock has advanced 88.8%, erasing all of the losses associated with the coronavirus-pandemic-fueled sell-off. And its outlook continues to look bright.

On October 21, Amphenol’s share price hit a new all-time high of $119.88, after it reported record third-quarter results that exceeded even the company’s own expectations. It also provided solid fourth-quarter and full-year guidance and raised its annual dividend.

You can’t ask for much more than that. Especially at a time when COVID-19 has plunged much of the global economy into a recession.

  Chart courtesy of StockCharts.com

Amphenol Corporation Overview

Amphenol Corporation designs, manufactures, and markets electrical, electronic, and fiber optic connectors, interconnect systems, antennas, sensors, and sensor-based products to clients in the United States, China, and elsewhere internationally. (Source: “Amphenol,” Amphenol Corporation, last accessed October 21, 2020.)

The Wallingford, CT-based company operates through two segments: Interconnect Product and Assemblies, and Cable Product Solutions.

The Interconnect Product and Assemblies segment is engaged in designing, manufacturing, and marketing a range of connector and connector systems, value-add products, and other products.

Its Cable Product and Solutions segment is responsible for designing, manufacturing, and marketing cables, value-added products, and components for use primarily in the broadband communications and information technology markets.

APH serves clients in the military, commercial aerospace, industrial, automotive, mobile device, IT and datacom, mobile networks, and broadband markets.

Record Q3 Results & Increased Dividend

On October 21, Amphenol announced that revenue for the third quarter, ended June 30, increased 10.5% year-over-year to a record $2.3 billion. (Source: “Third Quarter 2020 Record Results and Dividend Increase Reported by Amphenol Corporation,” Amphenol Corporation, October 21, 2020.)

It also reported record earnings per share (EPS) of $1.12 versus $0.92 in the same prior-year period. Adjusted diluted earnings per share came in at a record $1.09, compared to $0.95 per share in the third quarter of 2019.

During the third quarter, Amphenol purchased 1.9 million shares of its common stock for $202.0 million and paid dividends of $75.0 million. In addition, the board of directors approved a 16% increase in the company’s quarterly dividend, from $0.25 to $0.29 per share.

R. Adam Norwitt, president and CEO, commented, “While the COVID-19 pandemic continued to impact our business in the third quarter 2020, I am very proud that our team drove results that far exceeded our expectations, all while continuing to prioritize the safety and health of our employees worldwide.”

Year-to-date revenue increased 1.6% to $6.2 billion. Diluted EPS were $2.76, compared to $2.72 in the same period last year. Adjusted EPS were $2.61 compared to $2.76 in the third quarter of 2019. The decline in adjusted EPS was largely a result of the disruptions and costs associated with COVID-19.

Business Outlook

While the global economy remains very uncertain, Amphenol still provided solid guidance for the fourth quarter and fiscal 2020.

For the fourth quarter, Amphenol currently expects to report:

• Revenue in the range of $2.16 billion to $2.2 billion, a slight increase over the $2.15 billion recorded in Q4 2019
• Adjusted EPS in the range of $0.98 to $1.00 versus $0.98 in Q4 2019

For fiscal 2020, Amphenol expects to report:

• Sales of between $8.3 billion and $8.7 billion, representing one percent to two percent annual growth
• Adjusted EPS in the range of $3.59 to $3.61, which would be a decrease of three percent to four percent

Analyst Take

Amphenol Corporation is an excellent tech stock that has been rewarding buy-and-hold investors with strong capital gains and dividend growth. In spite of the coronavirus pandemic, APH was able to report record third-quarter results, raise its dividend, and provide a solid outlook for the remainder of the year. That bodes well for investors who are getting used to the kind of gains APH stock has been delivering since 1992.