Electronic component manufacturer Belden (NYSE: BDC) announced better-than-expected revenue in Q2 CY2025, with sales up 11.2% year on year to $672 million. Guidance for next quarter’s revenue was better than expected at $677.5 million at the midpoint, 0.5% above analysts’ estimates. Its non-GAAP profit of $1.89 per share was 7.5% above analysts’ consensus estimates.

Is now the time to buy Belden? Find out by accessing our full research report, it’s free.

Company Overview

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.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Belden’s sales grew at a tepid 5.8% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Belden’s recent performance shows its demand has slowed as its revenue was flat over the last two years. We also note many other Electronic Components businesses have faced declining sales because of cyclical headwinds. While Belden’s growth wasn’t the best, it did do better than its peers.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Enterprise and Industrial, which are 45.5% and 54.5% of revenue. Over the last two years, Belden’s Enterprise revenue (network infrastructure and broadband solutions) averaged 3.3% year-on-year declines. On the other hand, its Industrial revenue (infrastructure digitization and automation) averaged 4.4% growth.

This quarter, Belden reported year-on-year revenue growth of 11.2%, and its $672 million of revenue exceeded Wall Street’s estimates by 2.1%. Company management is currently guiding for a 3.4% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.6% over the next 12 months. Although this projection implies its newer products and services will spur better top-line performance, it is still below the sector average.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.

Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Belden has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 11.9%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Belden’s operating margin rose by 1.7 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Belden generated an operating margin profit margin of 11.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Belden’s EPS grew at a remarkable 13.9% compounded annual growth rate over the last five years, higher than its 5.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Belden’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Belden’s operating margin was flat this quarter but expanded by 1.7 percentage points over the last five years. On top of that, its share count shrank by 10.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Belden, EPS didn’t budge over the last two years, a regression from its five-year trend. We hope it can revert to earnings growth in the coming years.

In Q2, Belden reported adjusted EPS at $1.89, up from $1.51 in the same quarter last year. This print beat analysts’ estimates by 7.5%. Over the next 12 months, Wall Street expects Belden’s full-year EPS of $7.11 to grow 5.1%.

Key Takeaways from Belden’s Q2 Results

We enjoyed seeing Belden beat analysts’ revenue expectations this quarter. We were also glad its EPS guidance for next quarter exceeded Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 1.3% to $129.54 immediately following the results.

Belden put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.