Bel Fuse currently trades at $234.18 and has been a dream stock for shareholders. It’s returned 1,634% since July 2021, blowing past the S&P 500’s 72.3% gain. The company has also beaten the index over the past six months as its stock price is up 30.8% thanks to its solid quarterly results.
Is now still a good time to buy BELFA? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Are We Positive on BELFA?
Founded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ: BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors.
1. Operating Margin Rising, Profits Up
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.
Analyzing the trend in its profitability, Bel Fuse’s operating margin rose by 9.4 percentage points over the last five years, as its sales growth gave it immense operating leverage. Its operating margin for the trailing 12 months was 15.6%.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Bel Fuse’s EPS grew at 48.1% compounded annual growth rate over the last five years, higher than its 8.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Bel Fuse’s margin expanded by 13.3 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Bel Fuse’s free cash flow margin for the trailing 12 months was 10.6%.
Final Judgment
These are just a few reasons Bel Fuse is a rock-solid business worth owning, and with its shares topping the market in recent months, the stock trades at 26.6× forward P/E (or $234.18 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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