Amphenol Corp. (NYSE:APH) Passes Louis Navellier's "Little Book" Growth Screen

For investors looking for a methodical way to find fast-growing companies, the system described in Louis Navellier's "The Little Book That Makes You Rich" offers a useful beginning. The method centers on eight basic rules meant to find stocks with better earnings momentum, faster sales, increasing profitability, and sound financial condition. By filtering for these particular numerical measures, investors try to assemble a collection of companies showing not only growth, but high-quality, lasting growth. A recent filter using this approach has identified Amphenol Corp. - Class A (NYSE:APH) as a possible candidate for more detailed review.

How Amphenol Fits the "Little Book" Rules

Amphenol, a top designer and maker of electrical, electronic, and fiber optic connectors, seems to satisfy many of Navellier's important growth filters. The given data indicates good results across several rules, which are important to the method's aim of discovering companies with positive business momentum.

Positive Earnings Revisions and Surprises A central idea of the method is that upward changes in analyst estimates frequently come before positive stock price movement, as they point to better business fundamentals. Amphenol displays a large 16.9% rise in the average EPS estimate for the next quarter over the last three months. Also, the company has a flawless history of beating expectations, reporting four positive earnings surprises in the last four quarters, with an average beat of 16.5%. This steady capacity to do better than cautious forecasts is precisely the sort of earnings momentum the method tries to identify early.

Strong and Speeding Growth The "Little Book" method stresses not only growth, but speeding growth in both sales and earnings. Amphonel's figures here are especially good:

• Sales Growth: Revenue jumped 47.4% year-over-year and 53.4% quarter-over-quarter.
• Earnings Growth: EPS increased a notable 66.9% year-over-year and 86.0% quarter-over-quarter.
• Earnings Momentum: Importantly, the latest quarterly EPS growth of 86.0% is much faster than the growth rate from the same quarter a year earlier (28.2%), showing clear speeding, a key filter in the screen.

Increasing Profitability and Sound Cash Generation Growth is most useful when it leads to greater profitability and cash flow. Amphenol shows this well:

• Operating Margin Increase: The company's operating margin rose by 17.7% over the past year, showing it can turn higher sales into profits effectively.
• Sound Cash Flow: Free cash flow, a vital sign of financial condition and flexibility, rose by 75.1% over the past year.
• High Return on Equity (ROE): With an ROE of 30.5%, Amphenol is well above the method's lowest limit of 10%, indicating very good efficiency in creating profits from shareholder equity.

Fundamental Condition and Valuation Setting

A look at Amphenol's wider fundamental picture supports the image shown by the screen. The company gets a good total rating of 7 out of 10, with high scores in Profitability (9/10) and Growth (8/10). Its industry-best operating margin of 25.0% and good returns on capital point to a high-quality business model. While the valuation, with a P/E ratio above the market average, seems high, this is partly reasonable given the company's unusual growth rates and profitability. The financial condition score is acceptable, supported by a strong Altman-Z score and workable debt levels compared to cash flow.

For a complete look at these measures, you can see the full fundamental analysis report for APH.

Conclusion

Amphenol Corp. presents a strong example of a stock that meets a strict, rules-based growth filter taken from Louis Navellier's method. The company displays the signs the method looks for: strong earnings momentum, fast and speeding sales and profit growth, increasing margins, and better returns on capital. While its valuation requires thought and the wider market setting, where both long and short-term trends for the S&P 500 are now positive, matters, APH shows the sort of fundamental picture that growth-focused screens are made to find.

Interested in finding other companies that match this growth-centered method? You can see and adjust the screen based on "The Little Book That Makes You Rich" method here.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any securities. The analysis is based on provided data and a specific screening methodology. Investors should conduct their own thorough research and consider their individual financial circumstances before making any investment decisions.