Amphenol Corp Valuation – March 2019 #APH

Company Profile (excerpt from Reuters): Amphenol Corporation (Amphenol), incorporated on December 19, 1986, is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments, which include Interconnect Products and Assemblies, and Cable Products and Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $28,058,928,491 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 112.11% Pass
6. Moderate PEmg Ratio PEmg < 20 29.03 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.18 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.32 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.25
MG Growth Estimate 8.07%
MG Value $80.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $47.09
MG Value based on 0% Growth $27.60
Market Implied Growth Rate 10.26%
Current Price $94.26
% of Intrinsic Value 117.83%

Amphenol Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.11 in 2015 to an estimated $3.25 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Amphenol Corporation revealed the company was trading above its Graham Number of $34.36. The company pays a dividend of $0.88 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 29.03, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.55.

Amphenol Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.55
Graham Number $34.36
PEmg 29.03
Current Ratio 1.86
PB Ratio 7.18
Current Dividend $0.88
Dividend Yield 0.93%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $4,571,600,000
Total Current Liabilities $2,451,300,000
Long-Term Debt $2,806,400,000
Total Assets $10,044,900,000
Intangible Assets $4,501,100,000
Total Liabilities $5,980,700,000
Shares Outstanding (Diluted Average) 309,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.90
Dec2018 $3.85
Dec2017 $2.06
Dec2016 $2.61
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.25
Dec2018 $2.82
Dec2017 $2.29
Dec2016 $2.33
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Amphenol Corp Valuation – May 2018 $APH
5 Best Stocks for Value Investors This Week – 2/25/17
Amphenol Corp Valuation – February 2017 $APH
21 Best Undervalued Stocks of the Week – 8/27/16
Amphenol Corporation Valuation – August 2016 $APH

Other ModernGraham posts about related companies

Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN
Qualcomm Inc Valuation – March 2019 #QCOM
Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP
Applied Materials Inc Valuation – February 2019 $AMAT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amphenol Corp Valuation – May 2018 $APH

Company Profile (excerpt from Reuters): Amphenol Corporation (Amphenol), incorporated on December 19, 1986, is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments, which include Interconnect Products and Assemblies, and Cable Products and Solutions.

APH Chart

APH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – May 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $26,272,800,512 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.80 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 111.43% Pass
6. Moderate PEmg Ratio PEmg < 20 32.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.02 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.80 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.42 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.70
MG Growth Estimate 6.35%
MG Value $57.17
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $39.10
MG Value based on 0% Growth $22.92
Market Implied Growth Rate 12.08%
Current Price $88.10
% of Intrinsic Value 154.11%

Amphenol Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.08% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Amphenol Corporation revealed the company was trading above its Graham Number of $31.92. The company pays a dividend of $0.7 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 32.67, which was below the industry average of 49.78, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.74.

Amphenol Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.74
Graham Number $31.92
PEmg 32.67
Current Ratio 1.80
PB Ratio 7.02
Current Dividend $0.70
Dividend Yield 0.79%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $3,937,100,000
Total Current Liabilities $2,184,700,000
Long-Term Debt $2,489,400,000
Total Assets $9,403,700,000
Intangible Assets $4,580,500,000
Total Liabilities $5,435,800,000
Shares Outstanding (Diluted Average) 316,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.47
Dec2017 $2.06
Dec2016 $2.61
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12
Dec1998 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.70
Dec2017 $2.29
Dec2016 $2.33
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26
Dec2002 $0.23

Recommended Reading:

Other ModernGraham posts about the company

5 Best Stocks for Value Investors This Week – 2/25/17
Amphenol Corp Valuation – February 2017 $APH
21 Best Undervalued Stocks of the Week – 8/27/16
Amphenol Corporation Valuation – August 2016 $APH
19 Best Stocks For Value Investors This Week – 1/9/16

Other ModernGraham posts about related companies

Qualcomm Inc Valuation – May 2018 $QCOM
Advanced Micro Devices Inc Valuation – May 2018 $AMD
Ametek Inc Valuation – April 2018 $AME
Qorvo Inc Valuation – April 2018 $QRVO
FLIR Systems Inc Valuation – April 2018 $FLIR
NetApp Inc Valuation – April 2018 $NTAP
Applied Materials Inc Valuation – April 2018 $AMAT
Broadcom Inc Valuation – April 2018 $AVGO
Microchip Technology Inc Valuation – April 2018 $MCHP
KLA-Tencor Corp Valuation – March 2018 $KLAC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amphenol Corp Valuation – February 2017 $APH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amphenol Corp (APH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amphenol Corporation (Amphenol) is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products, and coaxial and specialty cable. The Company operates through two segments: Interconnect Products and Assemblies, and Cable Products and Solutions. The Interconnect Product and Assemblies segment primarily is engaged in designing, manufacturing and marketing a range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a range of applications in various end markets. The Cable Products and Solutions segment primarily engages in designing, manufacturing and marketing cables, value-added products and components for use primarily in the broadband communications and information technology markets. It designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa.

APH Chart

APH data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $21,444,072,670 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.20 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 126.04% Pass
6. Moderate PEmg Ratio PEmg < 20 27.10 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.96 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.20 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.35 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $2.56
MG Growth Estimate 8.19%
MG Value $63.78
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $37.17
MG Value based on 0% Growth $21.79
Market Implied Growth Rate 9.30%
Current Price $69.46
% of Intrinsic Value 108.91%

Amphenol Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.66 in 2013 to an estimated $2.56 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 9.3% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Amphenol Corporation revealed the company was trading above its Graham Number of $27.78. The company pays a dividend of $0.58 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 27.1, which was below the industry average of 28.12, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.91.

Amphenol Corporation receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.91
Graham Number $27.78
PEmg 27.10
Current Ratio 2.20
PB Ratio 5.96
Current Dividend $0.58
Dividend Yield 0.84%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $3,591,200,000
Total Current Liabilities $1,635,200,000
Long-Term Debt $2,635,500,000
Total Assets $8,498,700,000
Intangible Assets $3,967,100,000
Total Liabilities $4,823,800,000
Shares Outstanding (Diluted Average) 315,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.88
Dec2016 $2.61
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12
Dec1998 $0.13
Dec1997 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.56
Dec2016 $2.33
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26
Dec2002 $0.23
Dec2001 $0.21

Recommended Reading:

Other ModernGraham posts about the company

19 Best Stocks For Value Investors This Week – 1/9/16
Amphenol Corporation Valuation – January 2016 Update $APH
13 Best Stocks For Value Investors This Week – 10/3/15
Amphenol Corporation Analysis – October 2015 Update $APH
The Best Stocks of the IT Hardware Industry – September 2015

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Kopin Corporation Valuation – Initial Coverage $KOPN
Xilinx Inc Valuation – February 2017 $XLNX
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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amphenol Corporation Valuation – August 2016 $APH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today - July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amphenol Corporation (APH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amphenol Corporation (Amphenol) is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products, and coaxial and specialty cable. The Company operates through two segments: Interconnect Products and Assemblies, and Cable Products and Solutions. The Interconnect Product and Assemblies segment primarily is engaged in designing, manufacturing and marketing a range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a range of applications in various end markets. The Cable Products and Solutions segment primarily engages in designing, manufacturing and marketing cables, value-added products and components for use primarily in the broadband communications and information technology markets. It designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa.

APH Chart

APH data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,064,133,914 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.87 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 134.04% Pass
6. Moderate PEmg Ratio PEmg < 20 26.58 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.46 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.87 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.38 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

APH value chart August 2016

EPSmg $2.30
MG Growth Estimate 8.78%
MG Value $59.99
Opinion Fairly Valued
MG Grade C
MG Value based on 3% Growth $33.38
MG Value based on 0% Growth $19.57
Market Implied Growth Rate 9.04%
Current Price $61.19
% of Intrinsic Value 101.99%

Amphenol Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.45 in 2012 to an estimated $2.3 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 9.04% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Amphenol Corporation revealed the company was trading above its Graham Number of $25.53. The company pays a dividend of $0.56 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 26.58, which was above the industry average of 22.64. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.23.

Amphenol Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

APH charts August 2016

Net Current Asset Value (NCAV) -$4.23
Graham Number $25.53
PEmg 26.58
Current Ratio 2.87
PB Ratio 5.46
Current Dividend $0.56
Dividend Yield 0.92%
Number of Consecutive Years of Dividend Growth 5

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $3,158,100,000
Total Current Liabilities $1,100,000,000
Long-Term Debt $2,834,600,000
Total Assets $8,027,000,000
Intangible Assets $3,944,500,000
Total Liabilities $4,492,400,000
Shares Outstanding (Diluted Average) 315,400,000

Earnings Per Share History

Next Fiscal Year Estimate $2.53
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12
Dec1998 $0.13
Dec1997 $0.06
Dec1996 $0.09

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.30
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26
Dec2002 $0.23
Dec2001 $0.21
Dec2000 $0.18

Recommended Reading:

Other ModernGraham posts about the company

19 Best Stocks For Value Investors This Week – 1/9/16
Amphenol Corporation Valuation – January 2016 Update $APH
13 Best Stocks For Value Investors This Week – 10/3/15
Amphenol Corporation Analysis – October 2015 Update $APH
Amphenol Corporation Analysis – October 2015 Update $APH

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Jabil Circuit Inc Valuation – July 2016 $JBL
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Linear Technology Corp Valuation – July 2016 $LLTC
Arrow Electronics Inc Valuation – July 2016 $ARW

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amphenol Corporation Valuation – January 2016 Update $APH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amphenol Corporation (APH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amphenol Corporation (Amphenol) is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments: Interconnect Products and Assemblies, and Cable Products and Solutions. The Interconnect Products and Assemblies segment primarily designs, manufacturers and markets a range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a range of applications in a diverse set of end markets. The Cable Products and Solutions segment primarily designs, manufacturers and markets cable, value-added products and components for use primarily in the broadband communications and information technology markets, as well as certain applications in other markets.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – January 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $16,081,420,704 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.57 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 130.69% Pass
6. Moderate PEmg Ratio PEmg < 20 24.11 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.09 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.57 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.03 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

APH value Chart January 2016

EPSmg $2.10
MG Growth Estimate 9.44%
MG Value $57.49
Opinion Fairly Valued
MG Value based on 3% Growth $30.44
MG Value based on 0% Growth $17.84
Market Implied Growth Rate 7.80%
Current Price $50.60
% of Intrinsic Value 88.01%

Amphenol Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.29 in 2011 to an estimated $2.10 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 7.8% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amphenol Corporation (APH)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

APH Charts January 2016

Net Current Asset Value (NCAV) -$1.52
Graham Number $23.32
PEmg 24.11
Current Ratio 3.57
PB Ratio 5.09
Dividend Yield 1.02%
Number of Consecutive Years of Dividend Growth 4

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $3,862,300,000
Total Current Liabilities $1,081,300,000
Long-Term Debt $2,853,000,000
Total Assets $7,485,600,000
Intangible Assets $2,934,000,000
Total Liabilities $4,342,300,000
Shares Outstanding (Diluted Average) 315,887,000

Earnings Per Share History

Next Fiscal Year Estimate $2.37
Dec14 $2.21
Dec13 $1.96
Dec12 $1.70
Dec11 $1.53
Dec10 $1.41
Dec09 $0.92
Dec08 $1.17
Dec07 $0.97
Dec06 $0.70
Dec05 $0.57
Dec04 $0.46
Dec03 $0.30
Dec02 $0.23
Dec01 $0.24
Dec00 $0.32
Dec99 $0.12
Dec98 $0.13
Dec97 $0.06
Dec96 $0.09
Dec95 $0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.10
Dec14 $1.90
Dec13 $1.66
Dec12 $1.45
Dec11 $1.29
Dec10 $1.12
Dec09 $0.94
Dec08 $0.89
Dec07 $0.70
Dec06 $0.53
Dec05 $0.42
Dec04 $0.33
Dec03 $0.26
Dec02 $0.23
Dec01 $0.21
Dec00 $0.18
Dec99 $0.10

Recommended Reading:

Other ModernGraham posts about the company

13 Best Stocks For Value Investors This Week – 10/3/15
Amphenol Corporation Analysis – October 2015 Update $APH
The Best Stocks of the IT Hardware Industry – September 2015
The 8 Best Stocks For Value Investors This Week – 6/27/15
Amphenol Corporation Analysis – June 2015 Update $APH

Other ModernGraham posts about related companies

Arrow Electronics Inc Valuation – December 2015 Update $ARW
TE Connectivity Ltd Valuation – December 2015 Update $TEL
Broadcom Corp Valuation – November 2015 Update $BRCM
SanDisk Corp Valuation – November 2015 Update $SNDK
Corning Inc Valuation – November 2015 Update $GLW
Intel Corp Valuation – November 2015 Update $INTC
FLIR Systems Inc. Valuation – November 2015 Update $FLIR
NVIDIA Corporation Valuation – November 2015 Update $NVDA
FMC Technologies Inc. Valuation – November 2015 Update $FTI
Applied Materials Inc Valuation – November 2015 Update $AMAT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

 

Amphenol Corporation Analysis – October 2015 Update $APH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – September 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amphenol Corporation (APH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amphenol Corporation (Amphenol) is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments: Interconnect Products and Assemblies, and Cable Products and Solutions. The Interconnect Products and Assemblies segment primarily designs, manufacturers and markets a range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a range of applications in a diverse set of end markets. The Cable Products and Solutions segment primarily designs, manufacturers and markets cable, value-added products and components for use primarily in the broadband communications and information technology markets, as well as certain applications in other markets.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $15,127,061,089 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.65 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 132.21% Pass
6. Moderate PEmg Ratio PEmg < 20 23.47 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.13 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.65 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.06 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

APH value Chart October 2015

EPSmg $2.12
MG Growth Estimate 9.64%
MG Value $58.77
Opinion Fairly Valued
MG Value based on 3% Growth $30.68
MG Value based on 0% Growth $17.98
Market Implied Growth Rate 7.48%
Current Price $49.65
% of Intrinsic Value 84.48%

Amphenol Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.29 in 2011 to an estimated $2.12 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 7.48% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amphenol Corporation (APH)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

APH Charts October 2015

Net Current Asset Value (NCAV) -$1.80
Graham Number $23.24
PEmg 23.46
Current Ratio 3.65
PB Ratio 5.13
Dividend Yield 1.01%
Number of Consecutive Years of Dividend Growth 4

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $3,592,800,000
Total Current Liabilities $984,700,000
Long-Term Debt $2,759,200,000
Total Assets $7,228,700,000
Intangible Assets $2,949,100,000
Total Liabilities $4,163,600,000
Shares Outstanding (Diluted Average) 316,878,000

Earnings Per Share History

Next Fiscal Year Estimate $2.42
Dec14 $2.21
Dec13 $1.96
Dec12 $1.70
Dec11 $1.53
Dec10 $1.41
Dec09 $0.92
Dec08 $1.17
Dec07 $0.97
Dec06 $0.70
Dec05 $0.57
Dec04 $0.46
Dec03 $0.30
Dec02 $0.23
Dec01 $0.24
Dec00 $0.32
Dec99 $0.12
Dec98 $0.13
Dec97 $0.06
Dec96 $0.09
Dec95 $0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.12
Dec14 $1.90
Dec13 $1.66
Dec12 $1.45
Dec11 $1.29
Dec10 $1.12
Dec09 $0.94
Dec08 $0.89
Dec07 $0.70
Dec06 $0.53
Dec05 $0.42
Dec04 $0.33
Dec03 $0.26
Dec02 $0.23
Dec01 $0.21
Dec00 $0.18
Dec99 $0.10

Recommended Reading:

Other ModernGraham posts about the company

The Best Stocks of the IT Hardware Industry – September 2015
The 8 Best Stocks For Value Investors This Week – 6/27/15
Amphenol Corporation Analysis – June 2015 Update $APH
24 Companies in the Spotlight This Week – 3/28/15
Amphenol Corporation Quarterly Valuation – March 2015 $APH

Other ModernGraham posts about related companies

NetApp Inc. Analysis – September 2015 Update $NTAP
EMC Corporation Analysis – September 2015 Update $EMC
Analog Devices Inc. Analysis – September 2015 Update $ADI
Garmin Limited Analysis – September 2015 Update $GRMN
Texas Instruments Inc Analysis – September 2015 Update $TXN
My Personal Holdings: Apple Inc. – September 2015 Update $AAPL
The Best Stocks of the IT Hardware Industry – September 2015
Seagate Technology PLC Analysis – September 2015 Update $STX
Microchip Technology Inc. Analysis – September 2015 Update $MCHP
Seagate Technology PLC Analysis – September 2015 Update $STX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amphenol Corporation Analysis – June 2015 Update $APH

220px-Amphenol_Logo.svgAmphenol Corporation (APH) may intrigue many investors due to its healthy earnings growth over the last several years. In addition, several qualitative factors make the company interesting. For example, CEO Adam Norwitt expressed an expectation that the company’s acquisition strategy will continue to propel growth. A company’s growth through acquisition is a great qualitative issue to consider, but one must first look at a quantitative analysis of the company.

In fact, Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to determine a potential investment’s merits. Here’s an updated look at how the company fares in the ModernGraham valuation model.

This model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using theModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

APH Chart

APH data by YCharts

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least one-third over the last 10 years, using three-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests tobe suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings Growth – EPSmg greater than that 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $57.12
MG Value $58.63
MG Opinion Fairly Valued
Value Based on 3% Growth $30.69
Value Based on 0% Growth $17.99
Market Implied Growth Rate 9.24%
Net Current Asset Value (NCAV) -$1.70
PEmg 26.99
Current Ratio 3.82
PB Ratio 6.16

Balance Sheet – March 2015

Current Assets $3,534,000,000
Current Liabilities $926,000,000
Total Debt $2,757,000,000
Total Assets $7,026,000,000
Intangible Assets $2,902,000,000
Total Liabilities $4,076,000,000
Outstanding Shares 318,000,000

Earnings Per Share

2015 (estimate) $2.42
2014 $2.21
2013 $1.96
2012 $1.70
2011 $1.53
2010 $1.41
2009 $0.92
2008 $1.17
2007 $0.97
2006 $0.70
2005 $0.57

Earnings Per Share – ModernGraham

2015 (estimate) $2.12
2014 $1.90
2013 $1.66
2012 $1.46
2011 $1.29
2010 $1.13

Dividend History

APH Dividend Chart

APH Dividend data by YCharts

Competitive Comparison

Amphenol Corporation is not quite as attractive when compared to some other companies in the IT Hardware industry. For example, a ModernGraham valuation of TE Connectivity (NYSE:TEL) indicates that company is suitable for the Enterprising Investor and significantly undervalued at the present time.

Conclusion

Amphenol Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned by the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns. Therefore, all Enterprising Investors should feel very comfortable proceeding with the next stage of the analysis, which is a determination of an estimate of intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $1.29 in 2011 to an estimated $2.12 for 2015. This level of demonstrated growth is in line with the market’s implied estimate for earnings growth of 9.24% over the next 7-10 years.

The company’s recent earnings history shows an average annual growth in EPSmg of around 12.8%. The ModernGraham valuation model reduces such a rate to a more conservative figure, assuming some slowdown will occur, but still returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating Amphenol Corporation is fairly valued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

Amphenol Corporation Quarterly Valuation – March 2015 $APH

220px-Amphenol_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – March 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Amphenol Corporation (APH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amphenol Corporation (Amphenol) is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems and coaxial and high-speed specialty cable. Amphenol designs and manufactures connectors and interconnect systems, which are used primarily to conduct electrical and optical signals for a range of electronic applications. The Company offers a range of interconnect products for factory automation and motion control systems, machine tools, instrumentation and medical systems, mass transportation applications and automotive safety systems and a diverse range of on-board electronics. It designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia and Africa. It sells its products through its own global sales force, independent manufacturers’ representatives and a global network of electronics distributors to thousands of original equipment manufacturers (OEMs) in approximately 70 countries worldwide.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years - PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - PASS
  6. Moderate PEmg ratio – PEmg is less than 20 - FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - PASS
  3. Earnings Stability – positive earnings per share for at least 5 years - PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - PASS

Valuation Summary

Key Data:

Recent Price $60.05
MG Value $55.18
MG Opinion Fairly Valued
Value Based on 3% Growth $27.51
Value Based on 0% Growth $16.13
Market Implied Growth Rate 11.57%
Net Current Asset Value (NCAV) -$1.94
PEmg 31.65
Current Ratio 3.35
PB Ratio 6.55

Balance Sheet – December 2014

Current Assets $3,504,000,000
Current Liabilities $1,046,000,000
Total Debt $2,672,000,000
Total Assets $7,027,000,000
Intangible Assets $2,852,000,000
Total Liabilities $4,120,000,000
Outstanding Shares 317,200,000

Earnings Per Share

2014 $2.21
2013 $1.96
2012 $1.70
2011 $1.53
2010 $1.41
2009 $0.92
2008 $1.17
2007 $0.97
2006 $0.70
2005 $0.57
2004 $0.46

Earnings Per Share – ModernGraham

2014 $1.90
2013 $1.66
2012 $1.46
2011 $1.29
2010 $1.13
2009 $0.94

Dividend History

Conclusion:

Amphenol Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.13 in 2010 to $1.90 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 11.57% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amphenol Corporation (APH)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Amphenol Corporation (APH) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Amphenol Corporation Quarterly Valuation – December 2014 $APH

220px-Amphenol_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Dow Components to Research – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Amphenol Corporation (APH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amphenol Corporation (Amphenol) is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems and coaxial and high-speed specialty cable. Amphenol designs and manufactures connectors and interconnect systems, which are used primarily to conduct electrical and optical signals for a range of electronic applications. It has developed a range of connector and interconnect products for information technology and communications equipment applications, including the converging voice, video and data communications markets. The Company offers a range of interconnect products for factory automation and motion control systems, machine tools, instrumentation and medical systems, mass transportation applications and automotive safety systems and a diverse range of on-board electronics. In addition, Amphenol is a supplier of high performance, military-specification, circular environmental connectors.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years - PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - PASS

Valuation Summary

Key Data:

Recent Price $52.33
MG Value $55.18
MG Opinion Fairly Valued
Value Based on 3% Growth $27.51
Value Based on 0% Growth $16.13
Market Implied Growth Rate 9.54%
Net Current Asset Value (NCAV) -$1.57
PEmg 27.58
Current Ratio 2.17
PB Ratio 5.64

Balance Sheet – September 2014

Current Assets $3,373,000,000
Current Liabilities $1,555,000,000
Total Debt $2,023,000,000
Total Assets $6,852,000,000
Intangible Assets $2,894,000,000
Total Liabilities $3,876,000,000
Outstanding Shares 320,600,000

Earnings Per Share

2014 (estimate) $2.21
2013 $1.96
2012 $1.70
2011 $1.53
2010 $1.41
2009 $0.92
2008 $1.17
2007 $0.97
2006 $0.70
2005 $0.57
2004 $0.46

Earnings Per Share – ModernGraham

2014 (estimate) $1.90
2013 $1.66
2012 $1.46
2011 $1.29
2010 $1.13
2009 $0.94

Dividend History

Conclusion:

Amphenol Corporation qualifies for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the high PEmg and PB ratios.  The Enterprising Investor, on the other hand, is only concerned by the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.13 in 2010 to an estimated $1.90 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 9.54% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amphenol Corporation (APH)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Amphenol Corporation (APH) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Cisco Systems Inc Valuation – April 2019 #CSCO

Company Profile (excerpt from Reuters): Cisco Systems, Inc. (Cisco), incorporated on December 10, 1984, is engaged in designing and selling a range of technologies across networking, security, collaboration, applications and the cloud. The Company operates through three geographic segments: Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).The Company’s product and technologies includes, infrastructure platforms; applications; security and other products. It also offers technical support services and advanced services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CSCO – April 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $243,035,961,849 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.80 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 21.55% Fail
6. Moderate PEmg Ratio PEmg < 20 31.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.10 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.80 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.67 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.76
MG Growth Estimate 1.20%
MG Value $19.19
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $25.52
MG Value based on 0% Growth $14.96
Market Implied Growth Rate 11.43%
Current Price $55.21
% of Intrinsic Value 287.64%

Cisco Systems, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.63 in 2015 to an estimated $1.76 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.43% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cisco Systems, Inc. revealed the company was trading above its Graham Number of $24.85. The company pays a dividend of $1.24 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 31.37, which was below the industry average of 69.29, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-1.9.

Cisco Systems, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$1.90
Graham Number $24.85
PEmg 31.37
Current Ratio 1.80
PB Ratio 6.10
Current Dividend $1.24
Dividend Yield 2.25%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $53,117,000,000
Total Current Liabilities $29,479,000,000
Long-Term Debt $15,893,000,000
Total Assets $102,462,000,000
Intangible Assets $35,563,000,000
Total Liabilities $61,673,000,000
Shares Outstanding (Diluted Average) 4,505,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.93
Jul2018 $0.02
Jul2017 $1.90
Jul2016 $2.11
Jul2015 $1.75
Jul2014 $1.49
Jul2013 $1.86
Jul2012 $1.49
Jul2011 $1.17
Jul2010 $1.33
Jul2009 $1.05
Jul2008 $1.31
Jul2007 $1.17
Jul2006 $0.89
Jul2005 $0.87
Jul2004 $0.62
Jul2003 $0.50
Jul2002 $0.25
Jul2001 -$0.14
Jul2000 $0.36
Jul1999 $0.29

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.76
Jul2018 $1.27
Jul2017 $1.87
Jul2016 $1.82
Jul2015 $1.63
Jul2014 $1.54
Jul2013 $1.50
Jul2012 $1.30
Jul2011 $1.21
Jul2010 $1.20
Jul2009 $1.11
Jul2008 $1.08
Jul2007 $0.92
Jul2006 $0.74
Jul2005 $0.58
Jul2004 $0.40
Jul2003 $0.27

Recommended Reading:

Other ModernGraham posts about the company

Cisco Systems Inc Valuation – November 2018 $CSCO
Cisco Systems Inc Valuation – February 2018 $CSCO
5 Undervalued Dow Components to Research – March 2017
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2017
5 Undervalued Dow Components to Research – February 2017

Other ModernGraham posts about related companies

Salesforce.com Inc Valuation – March 2019 #CRM
Akamai Technologies Inc Valuation – February 2019 $AKAM
Accenture PLC Valuation – February 2019 $ACN
Fortinet Inc Valuation – February 2019 $FTNT
Synopsys Inc Valuation – February 2019 $SNPS
Symantec Corp Valuation – February 2019 $SYMC
Intuit Inc Valuation – February 2019 $INTU
Adobe Inc Valuation – February 2019 $ADBE
Autodesk Inc Valuation – February 2019 $ADSK
F5 Networks Inc Valuation – February 2019 $FFIV

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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