Bel Fuse Stock: This 5G Play Has Lots of Room to Run

BELFB Stock Up 131% in 2022 on Record Financial Results

September is typically the worst month for stocks, and this September hasn’t been bucking that historical trend. The stock market kicked off September with more declines as fears about a new COVID-19-related lockdown in China weighed on consumer sentiment.

The stock market pullback also comes on the heels of the Federal Reserve saying it will continue to aggressively raise interest rates to combat decades-high inflation. This will likely result in a cooling of the economy. (Source: “Powell Talks Tough, Warning Rates Are Going to Stay High for Some Time,” Bloomberg, August 26, 2022.)

The economic situation has certainly weighed down stocks this year. The S&P 500 is in correction territory, down by roughly 18% year-to-date, and the tech-heavy Nasdaq is deep in bear-market territory, down by 26%.

It’s not all doom and gloom for tech stocks, though—at least not the stocks of companies that are cash-rich and report high revenue and earnings growth. One of the best tech stocks at the moment is Bel Fuse Inc (NYSE:BELFB). The company designs and manufactures products that protect and connect electronic circuits.

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Unlike the broader stock market, which is deep in the red, Bel Fuse stock has been seeing nothing but green lately. As of this writing, BELFB stock is up by:

  • 20% over the last month
  • 81% over the last three months
  • 128% year-to-date
  • 115% year-over-year

Despite already making big gains, the outlook for Bel Fuse stock is bullish. Analysts have provided a 12-month share-price target of $35.00 to $40.00. This represents upside potential in the range of 19% to 36%.

Why the bullishness? While Bel Fuse Inc might be light on news, the company makes up for it by consistently reporting strong financial results and guidance. What more do you need?

Chart courtesy of StockCharts.com

About Bel Fuse Inc

Bel Fuse is an electronic component company that designs, manufactures, and markets a range of products that are used in sectors including 5G networking, automotive, broadcasting, commercial aerospace, consumer electronics, e-mobility, high-speed data transmission, medical, military, telecommunications, and transportation. (Source: “Bel Reports Second Quarter 2022 Results,” Bel Fuse Inc, July 27, 2022.)

The company operates through three segments:

  • Magnetic Solutions (integrated connector modules, power transformers, power inductors, and discrete components)
  • Power Solutions and Protection (various power products, module products, and circuit protection)
  • Connectivity Solutions (various connectors and cable assemblies)

6th Consecutive Quarter of Year-Over-Year Sales Growth

For the second quarter ended June 30, Bel Fuse announced that its net sales increased by 22.9% year-over-year to a record $170.6 million. (Source: Ibid.)

The company’s gross profit in the second quarter of 2022 went up by 32% year-over-year to $45.4 million, representing 26.6% of its net sales. In the second quarter of 2021, its gross profit was $34.2 million, or 24.7% of its gross sales. Its net income rallied by 116% to $17.0 million, or $1.37 per share.

Bel Fuse Inc’s second-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) went up by 65% to a record $19.1 million.

The company reported record quarterly bookings of $226.0 million, which led to a quarter-end order backlog of $580.0 million.

Bel Fuse Inc’s revenue in the first half of the year climbed by 23% year-over-year to $307.3 million. Meanwhile, its net income doubled to $22.1 million, or $1.78 per share. The company’s first-half adjusted EBITDA went up by 107% year-over-year to $30.7 million.

Commenting on the results, Farouq Tuweiq, Bel Fuse Inc’s CFO, noted, “The strategic initiatives we put in place are translating into unprecedented new milestones for Bel as we continue with our transformation.” (Source: Ibid.)

He continued, “Our focus remains on higher-margin revenue, operational efficiencies and investing in the future…Given our achievements to date and current backlog, we are confident about Bel’s near and long-term prospects.”

Analyst Take

What else can one say about Bel Fuse Inc? During one of the worst inflationary periods in 40 years, which has been hampered by supply chain issues and fears of a recession, the company has continued to report record financial results, with all three of its business units performing very well.

Bel Fuse Inc’s recently completed second quarter marked the company’s highest net sales and adjusted EBITDA. Its second-quarter bookings and order backlog also set all-time highs, both in terms of the dollar level of orders received and the margin profile of those orders.

BELFB stock has made large gains in 2022, and by all accounts, its future looks bright.