Diversified electronics manufacturer
) recently debriefed investors about its plans to bring about a
two-for-one stock split in October this year. The split stock will
be paid in the form of stock dividend and each shareholder at the
close of business hours on Oct 2, 2014 will receive an additional
share on the record date.
The strategic move is probably aimed at lowering the stock's traded
price to more attractive levels. Amphenol shares are currently
trading near their 52-week high and have appreciated by over 29% in
the last year. By maintaining steady market capitalization, the
move is expected to entice more investors who might feel that the
shares are trading significantly high compared with its peers.
On a trailing four-quarter basis, Amphenol shares are currently
trading at a P/E multiple of 24.1 compared with the industry
average of 18.9. The P/B multiple for the most recent quarter for
Amphenol current stands at 5.2 compared with the industry tally of
3.3. These imply that the shares of the company are trading at
relatively higher prices than other comparable companies in the
The lowered share price is expected to increase the liquidity of
the stock and lead to more trading as the number of outstanding
shares is doubled and share price halved. This in turn might
further drive up share prices as more small investors buy the stock
and boost demand.
The tactical decision follows stellar second-quarter 2014 results,
wherein Amphenol reported record earnings and revenues on the back
of solid organic and inorganic growth. The impressive growth was
primarily attributable to Amphenol's technology leadership and
market and geographic diversification. This was achieved on the
back of a lean and flexible cost structure and an agile and
entrepreneurial management team.
Moving forward, Amphenol is bullish about its revenue and earnings
expectations in the forthcoming quarters despite the uncertainties
prevailing in the global economy. The ongoing revolution in
electronics further enables the company to capitalize on these
opportunities and strengthen its position in the market. We also
remain buoyant on the stock.
Amphenol currently has a Zacks Rank #2 (Buy). Other stocks that
look promising and are worth a look in the industry include
InvenSense, Inc. (
), Nidec Corp. (
) and Universal Display Corp. (
). All these stocks carry a comparable Zacks Rank #2 (Buy).
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