What a time it’s been for Bel Fuse. In the past six months alone, the company’s stock price has increased by a massive 65.3%, reaching $110.67 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is there a buying opportunity in Bel Fuse, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.
Why Is Bel Fuse Not Exciting?
We’re glad investors have benefited from the price increase, but we're sitting this one out for now. Here are two reasons there are better opportunities than BELFA and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Bel Fuse grew its sales at a tepid 5% compounded annual growth rate. This fell short of our benchmark for the industrials sector.
2. EPS Took a Dip Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Sadly for Bel Fuse, its EPS declined by more than its revenue over the last two years, dropping 16.2%. This tells us the company struggled to adjust to shrinking demand.
Final Judgment
Bel Fuse isn’t a terrible business, but it isn’t one of our picks. Following the recent surge, the stock trades at 21.3× forward P/E (or $110.67 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward the most entrenched endpoint security platform on the market.
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