APH Stock Trades Higher Than Industry at 28.09X P/S: Is it Still a Buy?

Core Viewpoint - Amphenol (APH) shares are considered overvalued with a Value Score of D, trading at a forward 12-month Price/Earnings (P/E) ratio of 28.09X, which is higher than the Zacks Computer and Technology sector average of 24.91X [1][5]. Valuation Comparison - APH is trading at a premium compared to competitors such as CommScope (COMM), TE Connectivity (TEL), and Sensata Technologies Holding (ST), which have P/E ratios of 6.31X, 17.67X, and 8.38X respectively [2]. Stock Performance - Year-to-date, APH shares have declined by 2.7%, outperforming the broader sector's decline of 5.6%. In comparison, shares of CommScope, TE Connectivity, and Sensata Technologies Holding have declined by 7.8%, 4.7%, and 0.2% respectively [5]. - Over the trailing 12-month period, APH shares appreciated by 17.2%, underperforming CommScope's 329% surge but outperforming TE Connectivity's 3.1% increase and Sensata Technologies Holding's 25.2% decline [8]. Revenue Growth and Market Demand - Amphenol has experienced higher revenues across various end markets, including IT datacom, mobile networks, broadband, defense, commercial air, and automotive sectors. In Q4 2024, the company reported record orders of $5.14 billion, a 58% year-over-year increase, resulting in a book-to-bill ratio of 1.16:1, driven by increased demand from data centers and investments in artificial intelligence [9]. Business Model and Expansion - The diversified business model of Amphenol reduces volatility across individual end markets and geographies, enhancing long-term prospects. The company plans to expand its high-technology interconnect antenna and sensor offerings through organic growth and acquisitions [10][11]. - Recent acquisitions have contributed 8% to 2024 revenues, including the acquisition of CIT, which expanded Amphenol's presence in defense, commercial air, and industrial markets [12]. Future Guidance - For Q1 2025, Amphenol expects earnings between 49 cents and 51 cents per share, indicating year-over-year growth of 23% to 28%. Revenues are anticipated to be between $4 billion and $4.10 billion, suggesting growth in the range of 23% to 26% [14]. - The Zacks Consensus Estimate for Q1 2025 earnings is 52 cents per share, reflecting a 30% growth compared to the previous year, with revenues estimated at $4.19 billion, indicating a year-over-year growth of 28.55% [15]. Long-term Prospects - Amphenol's strong portfolio of high-technology interconnect products and increasing spending on defense technologies are expected to drive top-line growth [17]. - The company currently holds a Zacks Rank 2 (Buy) and a Growth Score of B, indicating a favorable investment opportunity [18].