What a brutal six months it’s been for Belden. The stock has dropped 20.9% and now trades at $93.30, rattling many shareholders. This might have investors contemplating their next move.
Is now the time to buy Belden, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Despite the more favorable entry price, we're swiping left on Belden for now. Here are two reasons why BDC doesn't excite us and a stock we'd rather own.
Why Is Belden Not Exciting?
With its enamel-coated copper wire used in WWI for the Allied forces, Belden (NYSE: BDC) designs, manufactures, and sells electronic components to various industries.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Belden’s sales grew at a sluggish 2.9% compounded annual growth rate over the last five years. This was below our standards. 
2. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Belden’s EPS grew at an unimpressive 7.2% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 2.9% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
Belden isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 12.3× forward price-to-earnings (or $93.30 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now. We’d recommend looking at a dominant Aerospace business that has perfected its M&A strategy.
Stocks We Would Buy Instead of Belden
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