On Dec 14, Zacks Investment Research updated the research report on diversified electronics manufacturer Amphenol Corporation APH.
Amphenol’s technology leadership and geographic diversification have led to impressive growth in third-quarter 2015. With a balanced organic and inorganic growth model, aided by a lean and flexible cost structure and an agile and entrepreneurial management team, Amphenol remains poised to register holistic growth in the impending quarters as well.
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 the automotive industrial and 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 further enable the company to post strong results.
The company 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 third-quarter 2015, Amphenol entered into a definitive agreement to acquire FCI Asia Pte Ltd for $1.275 billion.
Headquartered in Singapore, FCI manufactures interconnect solutions for the telecom, datacom, wireless communications and industrial markets. This complimentary product portfolio will enrich the service offerings of Amphenol to better serve its customers in a broad array of end markets. The acquisition is expected to be accretive to Amphenol’s earnings from the first year of its integration and result in synergistic benefits with advanced technological support and an experienced management team. We remain impressed by the company’s activity on the acquisition front and expect the acquisitions to be accretive in the long term with improvement in operating income margin and strong operating discipline.
Amphenol presently has a Zacks Rank #3 (Hold). Other stocks that are worth considering in the industry include Computer Task Group Inc. CTG, CDW Corporation CDW and Acxiom Corporation ACXM, each carrying a Zack Rank #2 (Buy).
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