Amphenol’s APH second-quarter 2020 adjusted earnings of 81 cents per share beat the Zacks Consensus Estimate by 26.6%. However, the figure declined 12% year over year.
Although net sales decreased 1.4% year over year to $1.987 billion, the same was much better than the consensus mark of $1.751 billion. Unfavorable foreign exchange hurt sales by $22 million.
The top line was negatively impacted by the coronavirus pandemic as certain customers of Amphenol experienced lower demand. Production also suffered from government-mandated shelter-in-home guidelines.
Markedly, sluggish automotive and commercial air markets were negated by strong growth in the information technology and data communications, mobile devices, and industrial markets in the quarter under review.
Amphenol Corporation Price, Consensus and EPS Surprise
Amphenol Corporation price-consensus-eps-surprise-chart | Amphenol Corporation Quote
Following the better-than-expected results, Amphenol’s shares were up 2.8% in pre-market trading.
Quarterly Details
Interconnect Products and Assemblies’ (95.5% of net sales) sales dipped 1.4% from the year-ago quarter to $1.898 billion. Moreover, Cable Products and Solutions sales were $89 million, down 0.8% year over year.
Gross margin on a GAAP basis contracted 170 basis points (bps) on a year-over-year basis to 30.4%.
Selling, general and administrative expenses (SG&A) as a percentage of revenues increased 50 bps on a year-over-year basis to 12.4%.
Adjusted operating margin contracted 180 bps on a year-over-year basis to 18%.
Segment wise, Interconnect Products and Assemblies’ operating margin shrank 220 bps on a year-over-year basis to 20% while Cable Products and Solutions’ operating margin contracted 30 bps to 9.4%.
Balance Sheet and Cash Flow
As of Jun 30, 2020, Amphenol had cash and cash equivalents worth $1.31 billion, lower than $2.38 billion as of Mar 31, 2020. The company also repaid debt worth $1.3 billion.
Cash flow from operations was $368 million compared with $384.3 million in the previous quarter.
During the quarter, the company paid roughly $74 million in dividends.
Guidance
Amphenol expects third-quarter earnings between 84 and 86 cents per share. Revenues are anticipated between $1.960 and $2 billion.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 75 cents, implying 21.1% decline from the figure reported in the year-ago quarter. The consensus mark for revenues stands at $1.89 billion, suggesting 10.1% fall from the year-ago quarter’s reported figure.
Zacks Rank & Stocks to Consider
Currently, Amphenol has a Zacks Rank #3 (Hold). Advanced Micro Devices AMD, A10 Networks ATEN and Impinj PI are stocks worth considering from the broader computer and technology sector. While A10 Networks and Impinj sport a Zacks Rank #1 (Strong Buy), AMD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While both AMD and A10 Networks are set to report quarterly results on Jul 28, Impinj is scheduled to report on Jul 29.
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