Can Amphenol (APH) Continue Its Earnings Momentum In Q1?

Diversified electronics manufacturer Amphenol Corporation (NYSE:APH) is scheduled to report first-quarter 2017 results before the opening bell on Apr 26. In the last reported quarter, earnings comfortably exceeded the Zacks Consensus Estimate by 3 cents. Amphenol surpassed earnings estimates in each of the trailing four quarters with an average positive earnings surprise of 5.0%. Let's see how things are shaping up for the upcoming results.

Why a Likely Positive Surprise?

Our proven model 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 of 67 cents and the Zacks Consensus Estimate of 66 cents, is +1.52%. A positive Earnings ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Amphenol’s Zacks Rank #3 when combined with a positive ESP makes an earnings prediction likely.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

What is Driving the Better-than-Expected Earnings?

Amphenol’s top-line growth is 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.

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 planes. These advanced electronic systems also require new higher technology interconnect solutions to enhance fuel efficiency and improve passenger experience, all of which create excellent opportunities for Amphenol.

In order to fuel further growth, Amphenol aims to make acquisitions on a global basis in the high-growth segments that have complementary capabilities from a product, customer and/or geographic standpoint. During the quarter, Amphenol acquired Phitek Systems Limited as part of its strategic acquisition program. Based in New Zealand, Phitek is a leading manufacturer of in-flight entertainment interconnect products for the commercial aerospace industry with annual sales of approximately $20 million. The company expects the acquisition to strengthen its global foothold and enhance its product offering in strategic markets, thereby augmenting its revenues.

The ongoing revolution in electronics enables Amphenol to capitalize on the opportunities and strengthen its position in the market. Amphenol also expects to leverage on the solid growth potential of the acquired companies to drive robust performance. The company expects organic growth of 1–4% in the first quarter. A balanced organic and inorganic growth model, a lean and flexible cost structure, and an agile and entrepreneurial management team augur well for the impending quarterly results. For the to-be-reported quarter, Amphenol expects adjusted earnings of 65–67 cents per share on revenues of $1.495–$1.535 billion, representing year-over-year growth of 10–14% and 3–6%, respectively.

Other Stocks to Consider

Here are some other 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:

Panera Bread Company (NASDAQ:PNRA) has an Earnings ESP of +1.09% and a Zacks Rank #3.

Pinnacle Foods Inc. (NYSE:PF) , with an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Treehouse Foods, Inc. (NYSE:THS) , with an Earnings ESP of +4.62% and a Zacks Rank #2.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>