Amphenol currently trades at $66.26 per share and has shown little upside over the past six months, posting a middling return of 0.9%. However, the stock is beating the S&P 500’s 6.9% decline during that period.
Is APH a buy right now? Or is this an overvalued company? Find out in our full research report, it’s free.
Why Is Amphenol 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
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Amphenol’s sales grew at an exceptional 13.1% compounded annual growth rate over the last five years. Its growth surpassed the average business services company and shows its offerings resonate with customers. 
2. Economies of Scale Give It Negotiating Leverage with Suppliers
With $15.22 billion in revenue over the past 12 months, Amphenol is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.
3. 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 15.1% compounded annual growth rate over the last five years, higher than its 13.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why we think Amphenol is one of the best business services companies out there, and with its recent outperformance in a weaker market environment, the stock trades at 29.9× forward price-to-earnings (or $66.26 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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