Amphenol (APH) Q2 Earnings: What's In Store For The Stock?

Diversified electronics manufacturer Amphenol Corporation (NYSE:APH) is scheduled to report second-quarter 2016 results before the opening bell on Jul 20. In the last reported quarter, earnings comfortably beat the Zacks Consensus Estimate by 3 cents. Amphenol has beaten earnings estimates consecutively in the last two quarters for an average positive earnings surprise of 3.04% over the trailing four quarters. Let's see how things are shaping up for the upcoming first-quarter results.

Key Factors in the Second Quarter

The successful integration of FCI Asia Pte Ltd is expected to be accretive to Amphenol’s earnings due to combined synergies and strong operating discipline, along with advanced technological support and experienced management team. The complimentary product portfolio is further anticipated to enrich the service offerings of Amphenol and enable it to better serve its customers in various end markets.

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

However, despite the stock’s inherent strengths, our proven model does not conclusively show that Amphenol is likely to beat earnings this quarter as it lacks 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 not the case here as you will see below:

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%.

Zacks Rank: Amphenol’s Zacks Rank #3, when combined with a 0.00% ESP, makes a surprise prediction difficult.

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:

Comerica Incorporated (NYSE:CMA) has an Earnings ESP of +1.47% and a Zacks Rank #3.

Federated Investors, Inc. (NYSE:FII) has an Earnings ESP of +2.13% and carries a Zacks Rank #3.

Cullen/Frost Bankers, Inc. (NYSE:CFR) has an Earnings ESP of +0.96% and carries a Zacks Rank #3.