Littelfuse, Inc. (LFUS): A Bear Case Theory 

We came across a bearish thesis on Littelfuse, Inc. on Quality Value Investing’s Substack by David J. Waldron. In this article, we will summarize the bulls’ thesis on LFUS. Littelfuse, Inc.’s share was trading at $253.56 as of December 1st. LFUS’s trailing and forward P/E were 53.42 and 20.33 respectively according to Yahoo Finance.

Littelfuse Incorporated (LFUS), a long-standing small-cap electronics manufacturer in the information technology sector, is reexamined in this updated coverage to determine whether it still merits inclusion in QVI’s Real-Time Stock Picks. Added to the portfolio in 2022 at a cost basis of $199.54 per share, the company operates across electronics, transportation, and industrial segments, supplying mission-critical components such as fuses, sensors, switches, relays, and power modules to diversified end markets.

Its century-long operating history, broad distribution model, and entrenched customer relationships underpin Morningstar’s narrow moat rating, supported by switching costs and historically strong returns on invested capital. QVI similarly views the company’s value proposition positively, noting the relative resilience of technology-oriented component suppliers compared with commodity-exposed sectors. However, performance across key financial metrics has weakened, raising concerns about management execution. Revenue growth over both five-year and one-year periods lagged far behind the S&P 500, and Littelfuse’s mid-single-digit net margin reflects structurally lower gross margins compared with the broader market.

Returns on equity and invested capital fell below QVI’s thresholds, and the company’s ROIC failed to exceed its cost of capital, suggesting inefficiencies in capital deployment despite an active buyback authorization running through 2027 with modest repurchases to date. Owners’ earnings also undershot expectations, with negative EPS growth over the past year and only low single-digit expansion on a five-year basis, although substituting free cash flow growth lifts long-term owners’ earnings to more acceptable levels. Balancing a strong industry position with deteriorating fundamentals, QVI maintains a bullish view on the company’s value proposition but assigns a bearish rating to its current business fundamentals.

Previously we covered a bullish thesis on Amphenol Corporation (APH) by TMTMoats in March 2025, which highlighted its diversified end-market exposure, strategic acquisitions, and AI-driven growth potential. The company’s stock price has appreciated approximately by 121.58% since our coverage. This is because the thesis largely played out. The thesis still stands as its long-term catalysts remain strong. David J. Waldron shares a similar view but emphasizes weaker fundamentals at Littelfuse.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.