What a fantastic six months it’s been for Vishay Precision. Shares of the company have skyrocketed 65.5%, hitting $47.00. This run-up might have investors contemplating their next move.

Is there a buying opportunity in Vishay Precision, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Do We Think Vishay Precision Will Underperform?

Despite the momentum, we're cautious about Vishay Precision. Here are three reasons why VPG doesn't excite us and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Vishay Precision’s 2.6% annualized revenue growth over the last five years was sluggish. This was below our standards.

2. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Vishay Precision, its EPS declined by 16.2% annually over the last five years while its revenue grew by 2.6%. This tells us the company became less profitable on a per-share basis as it expanded.

3. New Investments Fail to Bear Fruit as ROIC Declines

We like to invest in businesses with high returns, but the trend in a company’s ROIC can also be an early indicator of future business quality.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Vishay Precision’s ROIC has unfortunately decreased. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Final Judgment

Vishay Precision falls short of our quality standards. After the recent rally, the stock trades at 60.6× forward P/E (or $47.00 per share). This valuation tells us a lot of optimism is priced in - you can find more timely opportunities elsewhere. Let us point you toward one of Charlie Munger’s all-time favorite businesses.

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