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Methode Electronics (MEI)
NYSE:MEI
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Methode Electronics
(NYSE:MEI)
43Neutral
Positive Factors
Financial performance
MEI reported sales of $292.6 million and adjusted EBITDA of $22.1 million for Q2/25, surpassing both analyst and consensus estimates.
Operational efficiency
MEI returned to positive free cash flow generation at $20 million, indicating solid operational efficiency improvements.
Negative Factors
Automotive segment decline
Automotive segment sales declined 5.7% to $145.5 million driven by lower volume in Asia due to an EV lighting program roll-off.
Revenue shortfall
Lower-than-expected revenue from Stellantis program launches were a key factor in the shortfall in Q3/25 financial results.
Methode Electronics (MEI) vs. S&P 500 (SPY)
Market Cap
$244.48M
Dividend Yield8.18%
Average Volume (3M)492.59K
Price to Earnings (P/E)―
Beta (1Y)2.15
Revenue Growth-6.16%
EPS Growth-59.41%
CountryUS
Employees68
SectorTechnology
Sector Strength46
IndustryHardware & Equipment
Share Statistics
EPS (TTM)-2.59
Shares Outstanding35,690,750
10 Day Avg. Volume595,672
30 Day Avg. Volume492,593
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.22
Price to Cash Flow (P/CF)2.10
P/FCF Ratio2.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.50Price Target Upside70.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Methode Electronics Business Overview & Revenue Model
Company DescriptionMethode Electronics, Inc. is a global developer of custom-engineered and application-specific products and solutions. The company operates across several sectors, including automotive, industrial, and medical. Methode Electronics specializes in the design and manufacture of electronic components, such as sensors, connectors, and power distribution products, catering to a diverse range of industries and applications.
How the Company Makes MoneyMethode Electronics generates revenue through the sale of its engineered products and solutions, primarily to original equipment manufacturers (OEMs) and other major companies in the automotive, industrial, and medical sectors. Key revenue streams include the production and supply of custom electronic components, such as sensors and connectors, which are integral to the operation of various electronic and mechanical systems. The company also benefits from strategic partnerships and long-term contracts with leading firms in its target industries, ensuring a steady demand for its products. Additionally, Methode Electronics invests in research and development to innovate and expand its product offerings, further enhancing its market position and revenue potential.
Methode Electronics Financial Statement Overview
Summary
Methode Electronics faces declining financial performance across key areas. The income statement reflects shrinking revenue and profitability. The balance sheet indicates high leverage but a solid equity base. Cash flow challenges further compound financial difficulties, with negative growth and weak cash generation metrics. Strategic interventions are needed to improve operational efficiency and financial health.Income Statement
Methode Electronics has experienced declining revenue and profitability. The TTM data shows a revenue decrease of approximately 4.15% from the previous annual period, and the company reported negative EBIT and net income margins, indicating operational challenges. The gross profit margin has also decreased, showing pressure on cost management.45
Neutral
Balance Sheet
The company's balance sheet shows a high debt-to-equity ratio, increasing financial risk. However, the equity ratio remains strong, suggesting a solid asset base relative to liabilities. Despite a decrease in total assets and stockholders' equity over the periods, the company maintains a stable financial position.50
Neutral
Cash Flow
Cash flow analysis reveals a significant decline in operating cash flow and free cash flow, with negative growth rates over the periods. The free cash flow to net income ratio is weak, indicating challenges in cash generation and sustainability of operations. The operating cash flow to net income ratio is also negative, highlighting insufficient earnings to support operations.40
Negative
| Breakdown | ||||
| Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.11B | 1.18B | 1.16B | 1.09B | 1.02B | Gross Profit |
| 178.80M | 264.10M | 264.90M | 274.10M | 282.90M | EBIT |
| -112.00M | 90.40M | 111.70M | 127.90M | 147.10M | EBITDA |
| -52.80M | 151.60M | 174.60M | 191.60M | 207.10M | Net Income Common Stockholders |
| -123.30M | 77.10M | 102.20M | 122.30M | 123.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 161.50M | 157.00M | 172.00M | 233.20M | 217.30M | Total Assets |
| 1.40B | 1.58B | 1.39B | 1.47B | 1.37B | Total Debt |
| 358.20M | 335.40M | 231.30M | 263.70M | 378.00M | Net Debt |
| 196.70M | 178.40M | 59.30M | 30.50M | 160.70M | Total Liabilities |
| 637.50M | 637.30M | 475.30M | 549.00M | 587.20M | Stockholders Equity |
| 766.00M | 941.80M | 913.80M | 918.00M | 783.40M |
| Cash Flow | Free Cash Flow | |||
| -2.70M | 90.80M | 60.80M | 154.90M | 95.50M | Operating Cash Flow |
| 47.50M | 132.80M | 98.80M | 179.80M | 140.60M | Investing Cash Flow |
| -17.50M | -153.10M | -37.40M | -24.80M | -44.50M | Financing Cash Flow |
| -18.90M | 3.20M | -114.60M | -142.90M | 41.70M |
Methode Electronics Technical Analysis
Negative
6.75
Price Trends
9.71
Negative
10.38
Negative
10.48
Negative
Market Momentum
-0.89
Negative
34.01
Neutral
75.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MEI, the sentiment is Negative. The current price of 6.75 is below the 20-day moving average (MA) of 7.29, below the 50-day MA of 9.71, and below the 200-day MA of 10.48, indicating a bearish trend. The MACD of -0.89 indicates Negative momentum. The RSI at 34.01 is Neutral, neither overbought nor oversold. The STOCH value of 75.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MEI.
Methode Electronics Risk Analysis
Methode Electronics disclosed 34 risk factors in its most recent earnings report. Methode Electronics reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Methode Electronics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $81.89B | 36.22 | 26.73% | 0.81% | 21.25% | 24.59% | |
75 Outperform | $44.68B | 24.07 | 15.02% | 1.74% | -1.09% | -40.55% | |
67 Neutral | $52.18B | 21.49 | 28.16% | 1.97% | -4.99% | -9.18% | |
61 Neutral | $5.19B | 52.91 | 4.62% | 1.30% | -7.28% | -56.46% | |
58 Neutral | $21.67B | 10.60 | -18.43% | 2.42% | 4.66% | -24.45% | |
45 Neutral | $1.08B | ― | -40.78% | ― | -48.00% | -227.62% | |
43 Neutral | $244.48M | ― | -11.90% | 8.18% | -6.16% | -59.41% |
* Technology Sector Average
Performance Comparison
MEI
Methode Electronics
6.75
-4.88
-41.96%
APH
Amphenol
68.17
11.01
19.26%
LFUS
Littelfuse
210.03
-29.72
-12.40%
MXL
Maxlinear
11.94
-6.73
-36.05%
NXPI
NXP Semiconductors
200.06
-43.42
-17.83%
TEL
TE Connectivity
147.11
4.34
3.04%
Methode Electronics Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: -31.26% | Next Earnings Date: Jun 19, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant achievements in operational improvements, successful program launches, and a revamped management team. However, these positives were counterbalanced by a notable decline in sales, ongoing challenges with EV program rollouts, and broader market weaknesses, particularly in the automotive sector.Highlights
Successful Program Launches
Methode has successfully launched 20 new programs year-to-date and plans to launch another 33 programs over the next five quarters.
Executive Management Overhaul
The executive management team has been extensively rebuilt with five new leaders from outside the organization within the last seven months.
Data Center Sales Growth
Sales in data center applications were strong, contributing to 7% of quarterly sales and expected to reach 9% for the fiscal year, a significant increase from the historical 3-5% range.
Operational Improvements
Gross profit improved year-over-year due to lower scrap and freight costs, and operational improvements resulted in a $4 million increase in gross profit despite lower sales.
Positive Free Cash Flow
The company returned to positive free cash flow, generating $20 million in the quarter.
Lowlights
Sales Decline
Sales decreased by 8% year-over-year to $240 million, primarily due to the roll-off of two large auto programs and lower-than-expected EV demand.
Adjusted Pretax Loss
The company reported an adjusted pretax loss of $7 million, although it was an improvement from the previous year.
Delayed EV Program Launches
The ramp-up of new EV programs, particularly for Stellantis, has been slower than expected, impacting the quarter and fiscal outlook.
Weakness in Automotive Markets
The weakness in automotive markets, especially in North America and Europe, posed a headwind for sales.
Company Guidance
During the Methode Electronics fiscal 2025 third-quarter earnings call, the company provided guidance indicating a challenging quarter with sales of $240 million and an adjusted pretax loss of $7 million. Despite a decrease in sales compared to the previous year, Methode Electronics managed to achieve $4 million higher gross profit, attributed to improved operational execution, including lower scrap and freight costs. The company also reported a return to positive free cash flow of $20 million. Sales in the EV sector accounted for 24% of consolidated sales, although the dollar amount decreased slightly. The data center market was highlighted as a significant growth area, contributing to strong sales in power products. Methode is focused on launching new programs, with 20 programs launched year-to-date and an additional 33 planned over the next five quarters. Looking ahead, the company reaffirmed its guidance for profitable organic sales growth in fiscal 2026, despite a reduction in fiscal 2025 sales expectations due to headwinds from legacy auto program roll-offs and softness in EV demand. The balance sheet remains strong, with full compliance with leverage and interest coverage ratios, and significant improvements in accounts receivable and inventory management.Methode Electronics Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Methode Electronics Announces Key Leadership Changes
Neutral
Jan 30, 2025
On January 30, 2025, Methode Electronics announced that Andrea J. Barry will step down as Chief Administrative Officer and Chief Human Resources Officer, effective January 31, 2025, and will serve as a special advisor until May 3, 2025. In conjunction with her departure, Barry has entered a Separation Agreement that includes a severance package and other compensations. Concurrently, Methode appointed Karen Keegans as the new Chief Human Resources Officer, effective February 3, 2025. Keegans brings over 30 years of HR leadership experience and is expected to play a significant role in aligning the company’s culture and talent with its business objectives. This leadership transition is part of Methode’s broader strategy to enhance organizational capabilities and regain a prominent industry position.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.