Will Amphenol (APH) Beat Q4 Earnings On Improved Demand?

Diversified electronics manufacturer Amphenol Corporation (NYSE:APH) is scheduled to report fourth-quarter 2017 results before the opening bell on Jan 24. In the last reported quarter, the company’s adjusted earnings beat the Zacks Consensus Estimate by 9 cents. Over the trailing four quarters, it delivered a positive average earnings surprise of 8.9%, beating estimates in each.

Let’s see how things are shaping up prior to this announcement.

Key Factors in the Quarter

Amphenol’s top-line growth is benefiting from improved end-market demand, new product rollouts and market share gains. Demand continues to be strong in automotive, industrial and military markets. The diversification in end markets, with consistent focus on technology innovation and customer support through all phases of the economic cycle has enabled the company to post solid results over the past few quarters. A sustained drive for geographic and market diversification has further helped Amphenol to expand its customer base and develop new applications.

In addition, 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 in next-generation planes. These advanced electronic systems require new advanced technology interconnect solutions to enhance fuel efficiency and improve passenger experience, all of which create excellent opportunities for the company.

Moreover, Amphenol generates solid cash flow, which allows management the opportunity to invest in product innovations, acquisitions and business development. Also, it has historically returned significant cash through a combination of share repurchases and dividend to reward shareholders with risk-adjusted returns. A balanced organic and inorganic growth model, a lean and flexible cost structure, and an agile and entrepreneurial management team is likely to translate into relatively higher revenues in the quarter.

Amphenol also has bullish revenue and earnings expectations. The ongoing revolution in electronics has enabled the company to capitalize on the opportunities and strengthen its position in the market. It further expects to leverage on the solid growth potential of the acquired companies to drive robust performance in the future.

For 2017, Amphenol expects sales in the range of $6,828 million to $6,868 million, representing a year-over-year increase of 9%. The company estimates adjusted earnings per share in the range of $3.19 to $3.21, an increase of 17-18% year over year. The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $1,788 million.

Earnings Whispers

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Our proven model conclusively 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 Filter .