Amphenol Corp (APH, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $117.69, Amphenol Corp has witnessed a daily gain of 0.26%, marked against a three-month change of 21.83%. A thorough analysis, underlined by the GF Score, suggests that Amphenol Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Amphenol Corp's GF Score components are as follows:
- Financial strength rank: 7/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 9/10
With high ranks in financial strength, profitability, and growth, and a commendable momentum rank, Amphenol Corp's overall GF Score of 94 out of 100 signals the highest outperformance potential, despite a lower GF Value rank.
Understanding Amphenol Corp's Business
Amphenol Corp, with a market cap of $70.60 billion and sales of $12.55 billion, is a global supplier of connectors, sensors, and interconnect systems. Holding the second-largest connector market share globally, Amphenol Corp sells into diverse end markets such as automotive, broadband, commercial air, industrial, IT and data communications, military, mobile devices, and mobile networks. The company's geographical diversification extends to operations in 40 countries, and its operating margin stands at a healthy 20.66%.
Financial Strength Breakdown
According to the Financial Strength rating, Amphenol Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Amphenol Corp stands impressively at 18.6, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 7.26, Amphenol Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.35, Amphenol Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Amphenol Corp's impressive standing among its peers in generating profit. The company's Operating Margin has increased over the past five years, maintaining a level of 20.66% in both 2022 and 2023. Additionally, Amphenol Corp's Gross Margin has consistently risen, reaching 32.53% in 2023. This trend underscores the company's growing proficiency in transforming revenue into profit. Amphenol Corp's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Amphenol Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 13.1%, which outperforms better than 74.99% of companies in the Hardware industry. Moreover, Amphenol Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 15.1, and the rate over the past five years is 10.9. This trend accentuates the company's continued capability to drive growth.
Conclusion: Amphenol Corp's Position for Outperformance
Considering Amphenol Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's ability to maintain a strong balance sheet, increase profitability, and sustain growth positions it as a compelling choice for value investors. With a GF Score of 94, Amphenol Corp stands out as a robust investment opportunity. Will this trend continue to provide investors with significant returns? Only time will tell, but the current indicators are promising.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
