Belden currently trades at $129.93 and has been a dream stock for shareholders. It’s returned 314% since September 2020, more than tripling the S&P 500’s 95.4% gain. The company has also beaten the index over the past six months as its stock price is up 27.2% thanks to its solid quarterly results.
Is now the time to buy Belden, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is Belden Not Exciting?
Despite the momentum, we're sitting this one out for now. Here are three reasons we avoid BDC and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate 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 tepid 5.8% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector.
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Belden’s revenue to rise by 5%. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.
3. EPS Growth Has Stalled Over the Last Two Years
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
Belden’s EPS was flat over the last two years, just like its revenue. This performance was underwhelming across the board.
Final Judgment
Belden isn’t a terrible business, but it isn’t one of our picks. With its shares topping the market in recent months, the stock trades at 17.4× forward P/E (or $129.93 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. We’d suggest looking at one of our all-time favorite software stocks.
Stocks We Would Buy Instead of Belden
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