Amphenol APH

1
Amphenol (APH)

• Analyst Justin Miller
• November 1st, 2007

2
What they do

• Amphenol is the third largest manufacturers of
  interconnect products in the world. The Company
  designs, manufactures and markets electrical,
  electronic and fiber optic connectors, coaxial
  and flat-ribbon cable, and interconnect systems.
• Products are used almost in everything we use
  daily

3
Strengths

• Have a diversified presence in high growth
  markets Information Technology and Data
  Communication, Mobile Networks, Mobile Devices,
  Industrial, Broadband Communications, Military
  and Commercial Aerospace, and Automotive.
• World leaders in last four markets
• 64 of workforce located in low-cost labor
  regions.
• Caused lower production costs and higher
  operating margin

4
Weaknesses

• Although diverse, dependent on their
  communications industry, including tele, data,
  wireless, and broadband communications.
• Around 61 of their revenue from communications
  at the end of 2006.
• Changes in defense expenditures may reduce sales.
• Around 18 of their revenue came from sales of
  commercial and military market.
• Dependent on new product development and
  introduction.

5
Opportunities

• Always looking for new acquisitions
• Dec. 2005 acquired TCS, is the reason why their
  Interconnect Segment has increased margin for the
  past three years.
• During last quarter acquired a US manufacturing
  of interconnect product for the geophysical
  exploration industry with annual sales of
  approximately 35M
• Constantly coming out with new product
  developments

6
Threats

• Competition in all areas of its business.
• Senior VP sold 4,000 shares and exercises options
  for 20,000 shares

7
Recent News

• Just reported their third quarter earnings
• Outperformed their Dividend expectations by 9,
  this caused a 6.7 jump in their stock price
• Interconnect segment up 7 from last quarter due
  to margin improvement from TCS
• Sales were up 15 from last September
• Increases were from strong sales of aerospace,
  automotive and mobile devices, which are growing
  markets for Amphenol

8
Criteria
9
Valuation
Trend Analysis
10
Recent News

• Just reported their third quarter earnings
• Outperformed their expectations by 9, this
  caused a 6.7 jump in their stock price
• Interconnect segment up 7 from last quarter due
  to margin improvement from TCS
• Sales were up 15 from last September
• Increases were from strong sales of aerospace,
  automotive and mobile devices, which are growing
  markets for Amphenol

11
Q3 Data

• Q3 Growth from last years third quarter
• EPS up 28
• Sales increased 15
• NI up 37
• Q3 Operating Margin of 19.5, up from 18 last
  year due to the acquisition of TCS
• Also raised expectations for next 2 years

12
Moving Averages and RSI
13
Intrinsic Value
Three-Stage DDM 89.62 Discount Rate
10.5 Growth Rate for 5yrs 15 Stable Growth
Rate 8
14
Analyst recommendation

• Recommendation HOLD
• Reasons
• Continues to come out with new better products
  for cheaper prices and higher price margins
• Recent Acquisitions
• Growing Demand
• Until we do not use wires at all, Amphenol will
  continue to growth and be a industry leader
• Global franchise
• Conducts more than half of business outside of
  US like in Europe, Asia, and a small percent in
  Other countries.
• 64 of workforce works in low-cost countries

15
Fed Cuts Rates Another 25bps

• Yesterday Markets rallied on the news
• Today markets dropping caused by Oil up at 96 a
  barrel
• Consumers also scaled back their spending in
  September as worries continue about the crippling
  housing market and further credit market
  problems.
• Tomorrow the unemployment numbers will come out
  this could help to predict which way our economy
  will slide