Littelfuse, Inc. – Value Analysis (NASDAQ:LFUS) : December 26, 2017

Capitalcube gives Littelfuse, Inc. a score of 91.

Our analysis is based on comparing Littelfuse, Inc. with the following peers – Powell Industries, Inc., TE Connectivity Ltd., AVX Corporation, ON Semiconductor Corporation, General Electric Company, STMicroelectronics NV ADR RegS, CTS Corporation, Vishay Intertechnology, Inc., Bel Fuse Inc. Class A and Semtech Corporation (POWL-US, TEL-US, AVX-US, ON-US, GE-US, STM-US, CTS-US, VSH-US, BELFA-US and SMTC-US).

Investment Outlook

Littelfuse, Inc. has a fundamental score of 91 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It currently trades at a Price/Book ratio of (4.85).
  • LFUS-US outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • LFUS-US has relatively high profit margins while operating with median asset turns.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • LFUS-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • Compared with the peers chosen, LFUS-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • LFUS-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

LFUS-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 12.80% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 15.11%), and a well-cushioned interest coverage level of 17.47x, LFUS-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 10 chosen peers for the company, only 9 of the stocks have an outstanding debt balance. Companies with no debt include AVX-US.

LFUS-US has maintained its Quick & Able profile from the recent year-end.

  • LFUS-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 63.12x in 2012.
  • While its interest coverage decreased to 17.47x from 21.10x (in 2016), its peer median increased during this period to 10.36x from 5.03x.
  • Interest coverage fell 8.96 points relative to peers.
  • LFUS-US‘s debt-EV is similar to last year’s high of 12.80%, which compares to a low of 7.80% in 2015.
  • Though its debt-EV has remained relatively stable at 12.80% compared to 2016, its peer median has decreased to 15.11% from 18.02% during this period.
  • Relative to peers, debt-EV rose 2.91 percentage points.

Access the detailed analysis for Littelfuse, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Powell Industries, Inc. N/A 2.92 -108.43 283.5
TE Connectivity Ltd. N/A 1.54 16.93 56.29
AVX Corporation N/A 8.53 No interest exp 999
ON Semiconductor Corporation 29.8 1.97 4.02 36.08
General Electric Company 41.63 1.37 2.65 8.03
STMicroelectronics NV ADR RegS 13.01 2.29 27.77 54.16
CTS Corporation 10.83 2.28 18.02 77.89
Vishay Intertechnology, Inc. 17.2 4.33 10.36 110.79
Bel Fuse Inc. Class A 38.77 2.66 3.55 30.15
Semtech Corporation 11.15 3.8 7.58 60.48
Littelfuse, Inc. 12.8 3.36 17.47 48.03
Peer Median 15.11 2.66 10.36 56.29
Best In Class 10.83 8.53 No interest exp 999

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Company Profile

Littelfuse, Inc. engages in supplying of circuit protection products for the electronics, automotive and electrical industries. It offers electromechanical and electronic switch and control devices for commercial and specialty vehicles and sensors for automobile safety systems, as well as protection relays and power distribution centers for the safe control and distribution of electricity. It operates through the following segments: Electronics, Automotive, and Electrical. The Electronics segment includes the broadest and deepest portfolio of overvoltage and overcurrent solutions, as well as a leading offering of power switching devices. The Automotive segment maintains a direct sales force to service all the major automotive OEMs and system suppliers domestically. The Electrical segment markets and sells its power fuses and protection relays through the manufacturer’s representatives across North America. The company was founded by Edward V. Sundt in 1927 and is headquartered in Chicago, IL.

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