We Ran A Stock Scan For Earnings Growth And Amphenol (NYSE:APH) Passed With Ease

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Amphenol (NYSE:APH). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Amphenol with the means to add long-term value to shareholders.

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How Quickly Is Amphenol Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, Amphenol has grown EPS by 21% per year, compound, in the last three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Amphenol shareholders can take confidence from the fact that EBIT margins are up from 21% to 24%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

See our latest analysis for Amphenol

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Amphenol's forecast profits?

Are Amphenol Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$149b company like Amphenol. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth US$818m. We note that this amounts to 0.5% of the company, which may be small owing to the sheer size of Amphenol but it's still worth mentioning. This still shows shareholders there is a degree of alignment between management and themselves.

Is Amphenol Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Amphenol's strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Amphenol's continuing strength. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. It is worth noting though that we have found 1 warning sign for Amphenol that you need to take into consideration.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of companies which have demonstrated growth backed by significant insider holdings.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.