Bel Fuse (BELFA)

Electronic system and device provider Bel Fuse (NASDAQ:BELFA) announced better-than-expected revenue in Q3 CY2025, with sales up 44.8% year on year to $179 million. On top of that, next quarter’s revenue guidance ($172.5 million at the midpoint) was surprisingly good and 6.2% above what analysts were expecting. Its GAAP profit of $1.77 per share was 42.7% above analysts’ consensus estimates.

Company Overview

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.

Like many equipment and component manufacturers, electronic components companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include data centers and telecommunications, which can benefit companies whose optical and transceiver offerings fit those markets. But like the broader industrials sector, these companies are also at the whim of economic cycles. Consumer spending, for example, can greatly impact these companies’ volumes.

Competitors offering similar products include TE Connectivity (NYSE:TEL), Amphenol (NYSE:APH), and Vishay (NYSE:VSH).

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. Regrettably, Bel Fuse’s sales grew at a mediocre 6.9% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a poor baseline 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. Bel Fuse’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.5% annually. Bel Fuse isn’t alone in its struggles as the Electronic Components industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

This quarter, Bel Fuse reported magnificent year-on-year revenue growth of 44.8%, and its $179 million of revenue beat Wall Street’s estimates by 3.7%. Company management is currently guiding for a 15.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below the sector average.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

Bel Fuse’s unit economics are better than the typical industrials business, signaling its products are somewhat differentiated through quality or brand. As you can see below, it averaged a decent 32.1% gross margin over the last five years. That means for every $100 in revenue, roughly $32.10 was left to spend on selling, marketing, R&D, and general administrative overhead.

Bel Fuse produced a 39.7% gross profit margin in Q3, up 3.6 percentage points year on year. Bel Fuse’s full-year margin has also been trending up over the past 12 months, increasing by 1.1 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

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.

Bel Fuse has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 11.7%.

Analyzing the trend in its profitability, Bel Fuse’s operating margin rose by 12.9 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, Bel Fuse generated an operating margin profit margin of 16.9%, up 7 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Bel Fuse’s EPS grew at an astounding 90.5% compounded annual growth rate over the last five years, higher than its 6.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Bel Fuse’s earnings can give us a better understanding of its performance. As we mentioned earlier, Bel Fuse’s operating margin expanded by 12.9 percentage points over the last five years. On top of that, its share count shrank by 14.7%. 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 more recent period because it can provide insight into an emerging theme or development for the business.

For Bel Fuse, its two-year annual EPS declines of 6.1% mark a reversal from its (seemingly) healthy five-year trend. We hope Bel Fuse can return to earnings growth in the future.

In Q3, Bel Fuse reported EPS of $1.77, up from $0.61 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Bel Fuse’s full-year EPS of $5.02 to grow 5%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Bel Fuse has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 7.9% over the last five years, better than the broader industrials sector.

Taking a step back, we can see that Bel Fuse’s margin expanded by 6 percentage points during that time. This is encouraging because it gives the company more optionality.

Bel Fuse’s free cash flow clocked in at $20.32 million in Q3, equivalent to a 11.4% margin. The company’s cash profitability regressed as it was 7.9 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends trump temporary fluctuations.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Bel Fuse hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 17.3%, impressive for an industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Bel Fuse’s ROIC averaged 3.2 percentage point increases each year. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

Bel Fuse reported $57.74 million of cash and $248.1 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $135.6 million of EBITDA over the last 12 months, we view Bel Fuse’s 1.4× net-debt-to-EBITDA ratio as safe. We also see its $6.02 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Bel Fuse beat analysts’ EPS expectations this quarter. We were also excited its revenue guidance for next quarter outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock remained flat at $135.98 immediately following the results.

Updated: December 3, 2025 at 9:04 PM EST

Before deciding whether to buy Bel Fuse or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

There are some bright spots in Bel Fuse’s fundamentals, but its business quality ultimately falls short. Although its revenue growth was mediocre over the last five years, its growth over the next 12 months is expected to be higher. Plus, Bel Fuse’s rising cash profitability gives it more optionality.

Bel Fuse’s P/E ratio based on the next 12 months is 21.4x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment.