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Methode Electronics (MEI)
NYSE:MEI
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Methode Electronics (MEI) AI Stock Analysis

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MEI

Methode Electronics

(NYSE:MEI)

Rating:49Neutral
Price Target:
$7.00
▲(7.53%Upside)
Methode Electronics' overall stock score reflects significant financial and operational challenges, notably declining revenues and profitability, coupled with bearish technical indicators. While the earnings call suggests some positive operational improvements, the negative outlook in key segments like automotive and EV sales keeps the overall sentiment cautious.
Positive Factors
Cash Flow and Debt Management
The company generated $26 million of free cash flow, marking its best quarter since Q4/23, despite $20 million less in sales, and reduced its debt and net debt levels by $10 million from Q3/25.
Market Expansion
Sales to the EV market in Q3/25 were 24% of consolidated total sales, representing a year-over-year increase of 17%.
Operational Efficiency
MEI returned to positive free cash flow generation at $20 million, indicating solid operational efficiency improvements.
Negative Factors
Automotive Segment Challenges
MEI’s Automotive segment experienced a decline in net sales by 22.6% to $112.9 million due to lower volume in North America.
Guidance and Expectations
Q4/25 Results & FY/26 Guidance were light versus expectations due to challenges in the Automotive Segment.
Program Launch Delays
Lower-than-expected revenue from Stellantis program launches were a key factor in the shortfall in Q3/25 financial results.

Methode Electronics (MEI) vs. SPDR S&P 500 ETF (SPY)

Methode Electronics Business Overview & Revenue Model

Company DescriptionMethode Electronics, Inc. designs, engineers, and produces mechatronic products worldwide. It operates through four segments: Automotive, Industrial, Interface, and Medical. The Automotive segment supplies electronic and electro-mechanical devices, and related products to automobile original equipment manufacturers directly or through their tiered suppliers. Its products include integrated center consoles, hidden switches, ergonomic switches, transmission lead-frames, and LED-based lighting and sensors, which incorporate magneto-elastic sensing and other technologies that monitor the operation or status of a component or system. The Industrial segment manufactures lighting solutions; industrial safety radio remote controls; braided flexible cables; current-carrying laminated busbars and devices; custom power-product assemblies, such as PowerRail solution; high-current low-voltage flexible power cabling systems; and powder-coated busbars that are used in various markets and applications comprising aerospace, cloud computing, commercial vehicles, industrial, military, power conversion, and transportation. The Interface segment provides various copper-based transceivers and related accessories for the cloud computing hardware equipment and telecommunications broadband equipment markets; user interface solutions for the appliance, commercial food service, and point-of-sale equipment markets; and fluid-level sensors for the marine/recreational vehicle and sump pump markets. The Medical segment offers Dabir Surfaces, a surface support technology aimed at pressure injury prevention for use by patients who are immobilized or otherwise at risk for pressure injuries, including patients undergoing long-duration surgical procedures. Methode Electronics, Inc. was incorporated in 1946 and is headquartered in Chicago, Illinois.
How the Company Makes MoneyMethode Electronics generates revenue through the design, manufacture, and sale of its diverse range of electronic components and systems. The company's primary revenue streams come from its automotive segment, which supplies sensors, switches, and power distribution products to major automotive manufacturers. Additionally, Methode serves the appliance and industrial sectors with custom solutions that enhance connectivity and user interface functionality. The company also benefits from strategic partnerships and long-term contracts with key clients across its operational sectors, contributing to a stable revenue base.

Methode Electronics Earnings Call Summary

Earnings Call Date:Jul 09, 2025
(Q4-2025)
|
% Change Since: -36.05%|
Next Earnings Date:Sep 04, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a company undergoing significant transformation with operational improvements, strong cash flow, and record sales in certain segments. However, it also faces challenges with inventory adjustments, declining automotive sales, and a projected decrease in EV sales due to market demand issues and program delays. While there are promising areas and improvements, the negative impacts weigh heavily on the overall outlook.
Q4-2025 Updates
Positive Updates
Record Sales in Data Center Power Products
The company set records for the quarter and the full year in data center power product sales, finishing the year with over $80 million in sales, almost double those of fiscal 2024.
Strong Free Cash Flow
Methode Electronics delivered $26 million in free cash flow in the quarter, marking the best quarter since Q4 of fiscal 2023 and the second consecutive quarter of strong free cash flow.
Reduction in Debt and Improved Working Capital
The company reduced both its debt and net debt levels by $10 million from Q3, driven by a $12 million improvement in tolling recovery and a $22 million reduction in accounts receivable.
Significant Operational Improvements
Methode achieved a 100 basis points improvement in gross margin, $9 million in SG&A reductions, and an $11 million reduction in freight costs, along with a reduction in headcount by over 500 people.
Successful New Program Launches
The company launched 22 new programs in fiscal 2025 and expects to launch another 30 in fiscal 2026, with $170 million in bookings for new and extended programs.
Negative Updates
Significant Inventory Adjustments
The company recorded an adjusted loss from operations of $22 million, with $15 million attributable to unplanned inventory adjustments due to reduced, delayed, or canceled programs.
Decline in Automotive Sales
Sales were down year over year due to the impact of two large auto program roll-offs, with a $100 million decline in sales expected for fiscal 2026 driven by lower EV demand, mainly from Stellantis.
EV Sales Decline
The company projects a 10% to 15% decline in EV sales for fiscal 2026 due to weaker market demand, program launch delays, and cancellations, particularly in North America.
Historical Warranty and Quality Issues
Historical warranty and quality issues for existing auto programs contributed $5 million to the loss in the quarter.
Company Guidance
During the Methode Electronics fiscal 2025 fourth quarter results conference call, the company provided guidance for fiscal 2026, anticipating a doubling of EBITDA despite a projected $100 million decline in sales, primarily due to reduced EV demand. The guidance reflects operational improvements, including a $12 million improvement in tolling recovery, a $22 million reduction in accounts receivable, and a focus on cost-cutting and efficiency measures. The company also highlighted a strong performance in data center power products, with full-year sales exceeding $80 million, nearly double those of fiscal 2024. Sales for the fourth quarter were $257 million, an increase from the third quarter but a decline from the previous year, due to large program roll-offs and EV market challenges. The adjusted loss from operations was reported at $22 million, primarily driven by $15 million in unplanned inventory adjustments. Despite these challenges, Methode Electronics expects to leverage operational improvements and market opportunities to enhance financial performance in fiscal 2026.

Methode Electronics Financial Statement Overview

Summary
Methode Electronics is facing significant financial challenges with declining revenues and profitability. The company has negative net profit margins, increased leverage, and declining shareholder equity. Despite some stability in the balance sheet, the overall financial health indicates operational inefficiencies and a need for strategic improvements.
Income Statement
45
Neutral
Methode Electronics has experienced a declining revenue trajectory with a decrease in total revenue from $1.179 billion in 2023 to $1.048 billion in 2025. The net profit margin has turned negative, from a positive margin in earlier years to -5.97% in 2025, indicating profitability challenges. Gross profit margins have also decreased, pointing to increased cost pressures. The company's EBIT and EBITDA margins are also negative, reflecting operational inefficiencies.
Balance Sheet
55
Neutral
The balance sheet shows a mixed picture. Stockholders' equity has decreased over the years, and the debt-to-equity ratio has increased, indicating rising leverage. The equity ratio remains relatively stable, suggesting some balance sheet stability. However, the declining return on equity, turning negative in 2025, raises concerns about shareholder value creation.
Cash Flow
50
Neutral
Operating cash flow has declined significantly from 2021 to 2025, showing a weakening ability to generate cash from core operations. Free cash flow has also turned negative, primarily due to reduced operating cash flow and continuous capital expenditures. The ratio of operating cash flow to net income is volatile, and the free cash flow to net income ratio is negative, indicating cash flow challenges.
BreakdownJun 2025Jun 2024Jun 2023Jun 2022Jun 2021
Income Statement
Total Revenue1.05B1.11B1.18B1.16B1.09B
Gross Profit163.40M178.80M264.10M264.90M274.10M
EBITDA-23.90M-52.80M151.60M174.60M191.60M
Net Income-62.60M-123.30M77.10M102.20M122.30M
Balance Sheet
Total Assets745.90M1.40B1.58B1.39B1.47B
Cash, Cash Equivalents and Short-Term Investments103.60M161.50M157.00M172.00M233.20M
Total Debt343.20M358.20M335.40M231.30M263.70M
Total Liabilities379.30M637.50M637.30M475.30M549.00M
Stockholders Equity693.30M766.00M941.80M913.80M918.00M
Cash Flow
Free Cash Flow-15.20M-2.70M90.80M60.80M154.90M
Operating Cash Flow26.40M47.50M132.80M98.80M179.80M
Investing Cash Flow-32.90M-17.50M-153.10M-37.40M-24.80M
Financing Cash Flow-58.90M-18.90M3.20M-114.60M-142.90M

Methode Electronics Technical Analysis

Technical Analysis Sentiment
Negative
Last Price6.51
Price Trends
50DMA
8.16
Negative
100DMA
7.30
Negative
200DMA
8.94
Negative
Market Momentum
MACD
-0.55
Positive
RSI
35.77
Neutral
STOCH
21.77
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 6.51 is below the 20-day moving average (MA) of 8.23, below the 50-day MA of 8.16, and below the 200-day MA of 8.94, indicating a bearish trend. The MACD of -0.55 indicates Positive momentum. The RSI at 35.77 is Neutral, neither overbought nor oversold. The STOCH value of 21.77 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
74
Outperform
$4.72B62.045.02%11.65%
70
Outperform
$1.21B20.4411.96%0.38%1.16%19.81%
69
Neutral
$361.66M119.230.94%-14.26%-87.37%
69
Neutral
$1.39B27.944.84%1.76%-7.36%-20.46%
61
Neutral
$1.25B74.391.34%-8.06%-75.10%
58
Neutral
€2.95B11.66-8.77%2.74%5.06%-52.33%
49
Neutral
$240.81M-8.58%7.25%-5.96%49.33%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MEI
Methode Electronics
6.51
-5.61
-46.29%
BHE
Benchmark Electronics
38.57
-3.21
-7.68%
CTS
CTS
42.00
-10.11
-19.40%
ROG
Rogers
65.50
-57.65
-46.81%
TTMI
TTM Technologies
44.27
22.63
104.57%
VPG
Vishay Precision Group
27.28
-7.05
-20.54%

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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 12, 2025