At US$40.90, Is Bel Fuse Inc. (NASDAQ:BELF.A) Worth Looking At Closely?

While Bel Fuse Inc. (NASDAQ:BELF.A) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Bel Fuse’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Bel Fuse

Is Bel Fuse Still Cheap?

Great news for investors – Bel Fuse is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.94x is currently well-below the industry average of 17.32x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Bel Fuse’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Bel Fuse look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Bel Fuse, it is expected to deliver a relatively unexciting earnings growth of 6.8%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Bel Fuse, at least in the near term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since BELF.A is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on BELF.A for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BELF.A. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Bel Fuse has 1 warning sign we think you should be aware of.

If you are no longer interested in Bel Fuse, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.