What a time it’s been for Amphenol. In the past six months alone, the company’s stock price has increased by a massive 76%, reaching $110.99 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is it too late to buy APH? Find out in our full research report, it’s free.
Why Are We Positive On Amphenol?
With over 90 years of connecting the world's technologies, Amphenol (NYSE:APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Amphenol’s sales grew at an incredible 18.4% compounded annual growth rate over the last five years. Its growth surpassed the average business services company and shows its offerings resonate with customers.
2. Economies of Scale Give It Negotiating Leverage with Suppliers
With $18.82 billion in revenue over the past 12 months, Amphenol is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Amphenol’s EPS grew at an astounding 23.6% compounded annual growth rate over the last five years, higher than its 18.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why Amphenol is one of the best business services companies out there, and after the recent rally, the stock trades at 39.4× forward P/E (or $110.99 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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