Amphenol (NYSE:APH) Shows Strong Growth Alignment with Navellier's Momentum Strategy

Investors looking for high-growth possibilities frequently use systematic methods that find companies with solid fundamental momentum. One example is Louis Navellier's "The Little Book That Makes You Rich," which details eight specific rules for choosing excellent growth stocks. This approach concentrates on companies displaying positive earnings revisions and surprises, increasing sales and earnings growth, rising profitability, solid cash flow generation, and high returns on equity. The aim is to identify businesses with strong operational momentum that can lead to stock price increases.

AMPHENOL CORP-CL A (NYSE:APH) appears as a noteworthy candidate when assessed using Navellier's growth standards. The Connecticut-based manufacturer of electronic connectors and sensor systems shows several traits that match the approach's concentration on finding companies with improving business fundamentals.

Earnings Revisions and Surprises

A fundamental part of Navellier's method includes watching analyst behavior and earnings performance. The approach stresses that upward earnings revisions frequently indicate underlying strength that analysts are acknowledging, while repeated earnings surprises show a company's capacity to beat expectations.

• Next quarter EPS estimates have been revised upward by 15.54% over the past three months
• The company has delivered four consecutive positive earnings surprises
• Average earnings surprise over the last four quarters stands at 16.51%

These numbers imply analysts are adjusting to Amphenol's operational strength, while the company regularly beats expectations, a key trait Navellier finds predictive of future price gains.

Growth Trajectory

The method puts notable focus on both sales and earnings acceleration, looking for companies that are not only growing but growing at a faster pace. This acceleration often points to widening market opportunities and operational effectiveness.

• Quarterly revenue growth reached 53.37% year-over-year
• Annual revenue growth stands at 47.37%
• Quarterly EPS growth increased to 86.00%
• Annual EPS growth reached 66.86%

The significant increase from 28.21% quarterly EPS growth in the prior comparable period to the current 86.00% shows the earnings momentum Navellier's method favors.

Profitability and Cash Flow Expansion

Navellier's approach looks past top-line growth to evaluate whether companies are converting higher sales into increased profitability and cash generation. Widening margins suggest pricing strength and operational effectiveness, while solid cash flow offers financial adaptability.

• Operating margin widened by 17.68% over the past year
• Free cash flow grew by 75.15% annually
• Current operating margin stands at 25.01%

These numbers show Amphenol's capacity to not only raise sales but do so profitably, with cash flow growth greatly exceeding revenue growth, a sign of high-quality business performance.

Return on Equity and Overall Assessment

The method highlights high return on equity as a sign of efficient capital use. Companies that produce solid returns on shareholder equity typically have competitive benefits and disciplined capital allocation.

Amphenol provides a 30.52% return on equity, greatly surpassing Navellier's minimum requirement of 10% and indicating outstanding efficiency in creating profits from shareholder investments.

The full fundamental analysis report gives Amphenol a rating of 7 out of 10, noting very good profitability and growth features along with reasonable valuation questions. The report mentions outstanding returns on invested capital and widening margins, while recognizing some minor issues regarding financial health metrics.

Investment Considerations

While Amphenol shows solid alignment with Navellier's growth standards, investors should think about several factors. The company's P/E ratio of 45.36 seems high compared to wider market averages, though this might be reasonable given its growth path and exceptional profitability. The small dividend yield of 0.74% reflects management's choice of putting capital back into growth possibilities instead of paying it to shareholders.

The present market situation offers a varied background, with the S&P500 displaying a positive short-term trend but negative long-term momentum. Growth methods like Navellier's may have different results across market cycles, needing continuous watching of both individual company fundamentals and wider market conditions.

For investors wanting to find more companies that meet these strict growth standards, the complete screening results provide many candidates deserving more study.

Disclaimer: This analysis is based on fundamental data and a specific investment method. It is given for information only and does not form investment advice, recommendation, or endorsement of any particular security. Investors should do their own research and think about their personal financial situations before making investment decisions.