The shares of Belden Inc. (NYSE: BDC) increased almost 8% in the past week in anticipation of better than expected fiscal 2016 second-quarter results. The end-to-end signal transmission solution provider did not disappoint the market when it announced the results on Tuesday this week.
The quarterly earnings surpassed the Street’s estimates. Both analysts and traders have a bullish view of the stock due to the reasons given below. The share price closed at $75.47 on Wednesday.
The Clayton-based company reported a rise in the fiscal 2016 second-quarter GAAP revenue to $601.63 million, from $585.76 million in the second quarter last year. The adjusted revenue for the second quarter was $603.38 million, against $598.51 million in the prior year’s corresponding quarter.
In the quarter ended July 2016, Belden’s net income almost doubled to $41.85 million, from $21.59 million in Q2 2015. The Q2 2016 EPS was $0.98, against $0.50 per share in the corresponding period last year. Excluding charges, on a per-share basis, the second-quarter adjusted earnings of $1.54 was higher than the analysts’ estimates of $1.26 per share.
For the third quarter, the company anticipates GAAP revenues in the range of $593 million to $613 million and non-GAAP revenues between $595 million and $615 million. The GAAP EPS is expected to be between $0.66 and $0.76, while the non-GAAP EPS is predicted to be between $1.35 and $1.45.
For fiscal 2016, Belden raised its GAAP revenue expectation to a range of $2.348 billion to $2.378 billion. The prior GAAP revenue expectation was in the range of $2.313 billion to $2.363 billion. The fiscal 2016 GAAP EPS is now expected to be between $3.23 and $3.43. The prior GAAP EPS estimate range was $2.84 to $3.14.
The company also raised its full-year 2016 non-GAAP revenue forecast to a range of $2.355 billion to $2.385 billion, from the prior guidance range of $2.320 billion to $2.370 billion. The fiscal 2016 non-GAAP EPS outlook was also raised to a range of $5.50 to $5.70 per share, from the earlier guidance of $5.15 to $5.45 per share. Considering the impressive second-quarter results and strong guidance, fundamentally, we forecast a rise in the share price.
After remaining range-bound between 60 and 65 for nearly three months, the stock has started moving upwards. The next resistance zone for the stock lies between 80 and 85. The ascending RSI indicator shows that the uptrend is far from over.
Thus, it would be better to purchase a one-touch call option to profit from the probable appreciation in the price. The strike price for the call option should be about $80. The suggested expiry period of the contract is the second week of August.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
