Amphenol has been on fire lately. In the past six months alone, the company’s stock price has rocketed 74.7%, reaching $139.23 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is APH a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free for active Edge members.
Why Is APH a Good Business?
With over 90 years of connecting the world's technologies, Amphenol (NYSE: APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Amphenol’s 20.3% annualized revenue growth over the last five years was incredible. Its growth surpassed the average business services company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Amphenol’s EPS grew at an astounding 26.6% compounded annual growth rate over the last five years, higher than its 20.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Amphenol has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 15% over the last five years.
Final Judgment
These are just a few reasons why Amphenol is one of the best business services companies out there, and with the recent surge, the stock trades at 37.2× forward P/E (or $139.23 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
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