Amphenol Corporation (APH)

Conclusion

Amphenol designs, manufactures and sells electrical, electronic and fiber optic connectors. It operates through three segments: Communications Solutions, Harsh Environment Solutions, and Interconnect and Sensor Systems, and serves automotive, aerospace, defense, communications network, industrial and IT customers. At a price of 80.71 USD on 9 November 2026, its market capitalisation is 199.3 billion USD.

The verdict is overvalued. The price is 33.5 times earnings against a ten-year median of 16.0, and 19.9 times EV/EBITDA against a median of 10.5. The DCF gives 58.92 USD per share. The fair value band runs from 37.46 to 56.19 USD with a midpoint of 46.83 USD, a margin of safety of -42.0% at the current price. The reverse DCF implies growth of 20.0% a year, close to the 21.9% revenue CAGR of the past five years, while earnings per share grew only 11.3% a year over the same period.

What holds the case up is a return on invested capital of 23.9% against a WACC of 10.7%, free cash flow conversion of 96.2% over five years, and an Altman Z-score of 6.00. Earnings have beaten estimates in all of the last eight quarters. What would break it is a price-to-book ratio of 11.6 against a median of 3.6, a five-year share count growth of 15.7% a year, and a three-year EPS CAGR of just 3.0%.

Financial health

Financial strength is green, held up by all four metrics assessed as good. The current ratio is 1.94, the quick ratio 1.30, net debt to EBITDA 1.18, and interest coverage 12.1 times, with debt to equity at 1.04. The Altman Z-score is 6.00, in the safe zone; the Altman model was designed for manufacturers, and Amphenol is one. Insolvency risk is low, about 0.24% by the estimate of the Ohlson model over one to two years, based on figures as of 31 December 2025. The balance sheet is not a constraint on the investment case.

Earnings quality

Earnings quality is yellow: cash conversion and estimate momentum are good, while share count growth and the Piotroski score weigh on it. Free cash flow conversion is 86.2% on a trailing basis and 96.2% over five years. The accrual ratio is -0.038, meaning reported earnings are backed by cash. Stock-based compensation is 0.5% of revenue, leaving free cash flow after it at 4.95 billion USD. The share count has grown 15.7% a year over five years, so this is dilution rather than buybacks. The Piotroski score is 6 of 9, and the Beneish M-score is not available. Amphenol beat estimates in all eight recent quarters, by an average of 13.4%. Current-year estimates rose 6.5% over 90 days with 11 upgrades and no downgrades in the last 30 days.

Profitability

Profitability is green, with all four metrics assessed as good. The gross margin is 38.8% against a ten-year median of 32.4%, the operating margin 27.9% against 20.4%, and the net margin 18.0% against 14.7%. Operating margin stability is 7.9%. ROIC is 23.9% against a WACC of 10.7%, with ROIC minus WACC at 13.3%, and the five-year median ROIC is 18.1%. Return on equity is 34.7%, but the DuPont split shows leverage at work: a net margin of 18.5%, asset turnover of 0.64 and an equity multiplier of 2.70, as of 31 December 2025. ROIC is therefore the cleaner measure of returns.

Growth

Growth is green, with revenue growth strong and per-share growth slower. Revenue compounded at 22.3% over three years, 21.9% over five and 15.3% over ten, and grew in 9 of the last 10 years. Earnings per share compounded at 3.0% over three years, 11.3% over five and 10.7% over ten. Free cash flow per share grew 5.9% over three years, 9.9% over five and 9.7% over ten. The next-year EPS estimate points to growth of 27.9%.

Valuation

Valuation is red, as all five multiples sit well above their own ten-year medians. The P/E is 33.5 against a median of 16.0, a premium of 110.1%. EV/EBITDA is 19.9 against 10.5, a premium of 88.7%. P/FCF is 38.9 against 16.7, a premium of 132.4%. P/S is 6.0 against 2.2, a premium of 177.8%. P/B is 11.6 against 3.6, a premium of 220.4%. The DCF gives 58.92 USD per share at a discount rate of 11.3%, with 53.3% of value in the terminal value. The fair value from historical multiples is 34.73 USD. The DCF is built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The reverse DCF implies 20.0% growth against 21.9% five-year revenue growth. The dividend yield is 0.56% and the payout on free cash flow is 21.95%.

Risks

The main weakness is valuation: a price well above the fair value band leaves little room for error if growth slows. Per-share returns are also diluted, since the share count has risen 15.7% a year over five years, and EPS growth over three years is only 3.0%. A free cash flow yield of 2.6% offers a thin cushion. The Beneish M-score is not available, so the risk of earnings manipulation cannot be checked in this data. This analysis has limits: it has no debt maturity schedule and no revenue by segment, so refinancing risk and the contribution of each segment to growth cannot be judged. The DCF and fair value band rest on assumptions, not forecasts.