Faye Nguyen
Project part #3
Dear Daniel,
From 2014 to 2018 I predicted that the company will increase in revenue but at the same time it
will also increase its expense too. Their selling expense and research development will continue to
increase due to the fact that is an electrical corporation. They will continue to develop and trying to
improve their products in order to stay competitive against other companies in the industry. Their
income will increase due to the normal trend that sees from 2011 to 2014. The cost of product sole will
increase due to the increase in income. The more products they are willing to make the more they have
to spend. Overall the company will be better based on my forecast, but it is better to the point I think
you should invest in it would be no.
The weighted average cost of capital is 8.65% for Amphenol Corporation. By taking a weighted
average, we can see how much interest the company has to pay for every dollar it finances. It is used to
measure the cost of capital to a firm. Used to provide a discount rate for a financed project, because the
cost of financing the capital is a fairly logical price tag to put on the investment. Amphenol fall between
4.2% and 8.65%. The market price per share of the company is 95.51 as for now. I used earnings before
interest, taxes, depreciations, and amortization to estimated value of the company. Is the common
market based multiples of EBITDA. Amphenol Corporation Company’s stock is overvalued. With the
calculation it comes out to 31.37 when the market is selling for 95.51. As the financial analyst I
recommend that you should not invest in Amphenol Corporation.
From the look of the company it looks like the company is not doing such an amazing job. From
the current ratio, day sales in inventory, and day sales in account payable show that the corporation is
doing worse than the previous year. Even though the company weighted average cost of capital in the
range but still I believe that is best if you invest in a different company. I would not invest in Amphenol
for sure, so it is best if you take your money elsewhere.