Belden (BDC)

Electronic component manufacturer Belden (NYSE:BDC) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 6.6% year on year to $698.2 million. The company expects next quarter’s revenue to be around $695 million, close to analysts’ estimates. Its non-GAAP profit of $1.97 per share was 2.6% above analysts’ consensus estimates.

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.

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 CommScope (NASDAQ:COMM), TE Connectivity (NYSE:TEL), and Panduit (private).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Belden’s sales grew at a mediocre 6.8% 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.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. 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 dig further into the company’s revenue dynamics by analyzing its most important segments, Enterprise and Industrial, which are 45.4% and 54.6% of revenue. Over the last two years, Belden’s Enterprise revenue (network infrastructure and broadband solutions) averaged 1.5% year-on-year declines. On the other hand, its Industrial revenue (infrastructure digitization and automation) averaged 5.5% growth.

This quarter, Belden reported year-on-year revenue growth of 6.6%, and its $698.2 million of revenue exceeded Wall Street’s estimates by 2.9%. Company management is currently guiding for a 4.3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 4.6% over the next 12 months. Although this projection implies its newer products and services will fuel better top-line performance, it is still below average for the sector.

Cost of sales for an industrials business is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics.

Belden’s unit economics are great compared to the broader industrials sector and signal that it enjoys product differentiation through quality or brand. As you can see below, it averaged an excellent 36.6% gross margin over the last five years. Said differently, roughly $36.59 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

Belden produced a 37.7% gross profit margin in Q3, in line with the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Belden’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 12% over the last five years. This profitability was top-notch for an industrials business, showing it’s an well-run company with an efficient cost structure. 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 might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, Belden generated an operating margin profit margin of 10.9%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

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.

Belden’s EPS grew at an astounding 19.3% compounded annual growth rate over the last five years, higher than its 6.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Belden’s quality of earnings can give us a better understanding of its performance. A five-year view shows that Belden has repurchased its stock, shrinking its share count by 10.2%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

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 Belden, its two-year annual EPS growth of 1.8% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Belden reported adjusted EPS of $1.97, up from $1.70 in the same quarter last year. This print beat analysts’ estimates by 2.6%. Over the next 12 months, Wall Street expects Belden’s full-year EPS of $7.38 to grow 3.8%.

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.

Belden 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 8.2% over the last five years, better than the broader industrials sector.

Taking a step back, we can see that Belden’s margin expanded by 1.2 percentage points during that time. This is encouraging because it gives the company more optionality.

Belden’s free cash flow clocked in at $65.33 million in Q3, equivalent to a 9.4% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Belden hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked. Its five-year average ROIC was 12.9%, higher than most industrials businesses.

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. Unfortunately, Belden’s ROIC averaged 2.9 percentage point decreases over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Belden reported $314.3 million of cash and $1.38 billion 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 $450.8 million of EBITDA over the last 12 months, we view Belden’s 2.4× net-debt-to-EBITDA ratio as safe. We also see its $44.72 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.

We were glad Belden's revenue and EPS both outperformed Wall Street’s estimates. Looking ahead, next quarter's EPS guidance also beat.  Overall, this print had some key positives. The stock traded up 4% to $124.50 immediately following the results.

Updated: December 4, 2025 at 10:21 PM EST

Before investing in or passing on Belden, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Belden isn’t a terrible business, but it doesn’t pass our bar. To kick things off, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its projected EPS for the next year is lacking.

Belden’s P/E ratio based on the next 12 months is 15.7x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $144.20 on the company (compared to the current share price of $120.56).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.