Amphenol Corporation (NYSE:APH) Matches Key Growth Criteria in "The Little Book" Screen

For investors looking for a methodical way to find companies with high growth, the principles in Louis Navellier's "The Little Book That Makes You Rich" provide a strong framework. The method uses eight main rules meant to find stocks with better earnings momentum, faster sales, increasing profitability, and sound financial condition. By searching for these particular fundamental factors, investors try to create a collection of companies showing not only growth, but an enhancing caliber of growth that may result in returns above the market.

A recent filter using this method has identified Amphenol Corporation (NYSE:APH) as a stock for more detailed review. As a top designer and maker of electrical and fiber optic connectors and sensors, Amphenol's latest financial results seem to match well with Navellier's growth-oriented rules.

Matching the "Little Book" Requirements

Amphenol's present financial measures show a strong match for the method's central needs. The company's results across many of Navellier's eight rules are especially significant:

• Positive Earnings Revisions & Surprises: Analyst outlook is improving, with the average EPS estimate for the next quarter increased by more than 16% in the past three months. Also, Amphenol has a flawless history of surpassing forecasts, beating analyst EPS estimates in all of the last four quarters by an average of 16.5%. These repeated positive surprises are a trait of companies with operational speed, often making analysts adjust their views and leading to greater future prices.

• Faster Growth in Sales and Earnings: The company is showing considerable top and bottom-line increase. Revenue increased 47.4% over the last year, while sales in the latest quarter jumped 53.4% compared to the same time last year. More notably, earnings growth is speeding up markedly. EPS grew 86% quarter-over-quarter, a large rise from the 28.2% growth seen in the similar quarter a year earlier. This quickening in earnings momentum is a vital sign for growth investors, indicating the company's profitability is reaching a new, steeper path.

• Increasing Profitability and Sound Cash Creation: Amphenol is not only growing sales, it is becoming more profitable at the same time. The company's operating margin grew by 17.7% over the past year, showing very good cost management and pricing ability. This growth is a main part of the method, as it shows good quality earnings growth. Along with this, Amphenol's free cash flow increased a notable 75.1% year-over-year, giving the financial ability to support future expansion, pursue strategic purchases, or give money back to shareholders without needing much outside funding.

• High Return on Equity: With a Return on Equity (ROE) of 30.5%, Amphenol is well above the method's lowest limit of 10%. This measure shows the company's outstanding skill at creating profits from shareholder equity, a mark of a capably run business with a lasting competitive edge.

Fundamental Rating and Valuation Setting

ChartMill's fundamental analysis report gives Amphenol a firm rating of 7 out of 10. The report points out a very good profitability picture, with sector-best measures for Return on Equity, Return on Invested Capital, and Operating Margin. The growth rating is also high at 8 out of 10, backed by the notable past and projected future growth rates in both revenue and EPS.

The main point for care is in valuation. The stock sells at a higher price based on standard Price-to-Earnings ratios, both compared to its own history and the wider S&P 500. However, this is partly balanced by its high growth rate, as seen in a more attractive PEG ratio. The financial condition score is acceptable, supported by a high Altman-Z score and reasonable debt levels relative to its considerable free cash flow, though the report mentions a rising pattern in the debt-to-assets ratio. You can see the full, in-depth fundamental analysis for APH here.

Is Amphenol a "Little Book" Stock?

For investors using the "Little Book" method, Amphenol offers a strong argument. It successfully meets the requirements for positive earnings revisions, steady surprises, faster sales and earnings growth, growing margins, considerable cash flow creation, and a high return on equity. These elements together describe a company in a solid growth period with enhancing operational quality.

While the present valuation requires notice and indicates expectations are already elevated, the method is essentially built to find momentum and quality growth, which Amphenol currently displays. The company’s place in important connectivity markets for industrial, automotive, and data communications offers a clear path for the growth patterns to persist.

Interested in finding other companies that match this growth-oriented model? You can investigate and adjust the live "Little Book" screening template on your own here.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The analysis is based on data believed to be reliable, but its accuracy cannot be guaranteed. Investors should conduct their own independent research and consider their individual financial circumstances before making any investment decisions.