Why Amphenol Stock Beat the Market Today
Key Points
It closed a pricey acquisition on Monday.
This is a $10.5 billion deal for a CommScope business unit.
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The stock of electronic components specialist Amphenol (NYSE: APH) received quite a charge from investors on Monday. Juiced by the news that the company has completed its latest buyout, they sent the share price almost 4% higher that trading session, a rate that easily bettered the 0.2% gain of the bellwether S&P 500 index.
A $10.5 billion development
Well before market open that day, Amphenol announced its purchase of CommScope's Connectivity and Cable Solutions (CSS) unit had closed. That deal was first announced in August of last year. Amphenol agreed to pay $10.5 billion in an all-cash transaction for CSS, with the amount subject to post-closing adjustments.
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In a press release the company published at that time, it wrote that owning CCS "expands Amphenol's interconnect product capabilities in the fast-growing IT datacom market, particularly adding fiber optic interconnect products for artificial intelligence and other data center applications."
It also "further diversifies Amphenol's broad portfolio of fiber optic and other interconnect product solutions in the communications networks and industrial markets," the specialized industrial company added.
Welcome to your new home
In the announcement heralding the finalization of the buy, Amphenol stated that CCS is expected to generate sales of roughly $4.1 billion this year. It's also expected to be $0.15 accretive to full-year earnings per share, excluding acquisition-related expenses. CCS is to be reported under the company's communications solutions segment.
While $10.5 billion is a large swallow for any company, CCS is well poised to make a significant positive effect on Amphenol's fundamentals.
That anticipated $4.1 billion in 2026 sales is a robust 27% of the company's revenue for all of 2025. Meanwhile, cost-saving efficiencies should boost that expected profitability, and contribute generously to the bottom line. Investors were right to cheer the closing of the deal.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amphenol. The Motley Fool has a disclosure policy.
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