Value
7.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 5.3 |
| Fwd P/E | 3.0 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 35.9x
- ▸PEG: 0.26
- ▸Attractively valued
MEI · Why this verdict
Why Methode Electronics (MEI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Methode Electronics is a loss-making small-cap electronic components maker with weak quality (2.8/10), repeated earnings misses and a technical breakout, where 27% analyst-target upside depends on turning losses around.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue in the latest quarter was $265.4M versus $240.5M a year earlier, a gain of about 10%, near the $257.7M estimate for the next quarter. Revenue quarters | Quarterly revenue should stay above $250M over the next 12 months. | →Stable |
| CounterRevenue is below the $292.6M and $288.0M levels of late 2024 and 2023, so the recent gain may be a bounce off a low base. | ||
Quality scores 2.8/10, below the engine's 4.0 floor, with return on equity, gross margin, operating margin and net margin components all at or near 0 and no competitive moat. Quality breakdown | Margins should recover enough for the quality score to rise above 4.0 within 12 months. | →Stable |
| CounterThe Piotroski F-Score is a strong 8/9 and the current ratio component is 8.2, suggesting financial health is intact despite weak reported margins. | ||
EPS missed estimates in 3 of the last 4 quarters (latest -$0.22 against -$0.20), with an average surprise of -33.8%, so losses are persisting. Earnings | Quarterly losses should narrow and EPS should approach break-even by the next 12 months. | →Stable |
| CounterThe latest miss was only 10% and the loss per share is at its smallest of the recent misses, which could mark the start of stabilization. | ||
A golden cross with the price above all moving averages and a MACD that is bullish give a momentum score of 7.4/10 and a breakout setup. Chart pattern detection | Momentum should hold at or above 5.5 as the breakout confirms. | →Stable |
| CounterThe stock showed an extreme gap down of 6.7% and implied volatility of 77%, so the breakout could fail quickly on weak results. | ||
The analyst target of $18.70 is 27.0% above the $14.72 price, with a reward-to-risk of 1.8 against 15.0% downside. Analyst target | The price should advance toward the $18.70 target as earnings stabilize. | ↓Deteriorating |
| CounterAnalysts set targets for a company that has missed estimates in 3 of 4 quarters, so the target may be cut rather than reached. | ||
Revenue in the latest quarter was $265.4M versus $240.5M a year earlier, a gain of about 10%, near the $257.7M estimate for the next quarter.
→StableRevenue quarters
- Expectation
- Quarterly revenue should stay above $250M over the next 12 months.
CounterRevenue is below the $292.6M and $288.0M levels of late 2024 and 2023, so the recent gain may be a bounce off a low base.
Quality scores 2.8/10, below the engine's 4.0 floor, with return on equity, gross margin, operating margin and net margin components all at or near 0 and no competitive moat.
→StableQuality breakdown
- Expectation
- Margins should recover enough for the quality score to rise above 4.0 within 12 months.
CounterThe Piotroski F-Score is a strong 8/9 and the current ratio component is 8.2, suggesting financial health is intact despite weak reported margins.
EPS missed estimates in 3 of the last 4 quarters (latest -$0.22 against -$0.20), with an average surprise of -33.8%, so losses are persisting.
→StableEarnings
- Expectation
- Quarterly losses should narrow and EPS should approach break-even by the next 12 months.
CounterThe latest miss was only 10% and the loss per share is at its smallest of the recent misses, which could mark the start of stabilization.
A golden cross with the price above all moving averages and a MACD that is bullish give a momentum score of 7.4/10 and a breakout setup.
→StableChart pattern detection
- Expectation
- Momentum should hold at or above 5.5 as the breakout confirms.
CounterThe stock showed an extreme gap down of 6.7% and implied volatility of 77%, so the breakout could fail quickly on weak results.
The analyst target of $18.70 is 27.0% above the $14.72 price, with a reward-to-risk of 1.8 against 15.0% downside.
↓DeterioratingAnalyst target
- Expectation
- The price should advance toward the $18.70 target as earnings stabilize.
CounterAnalysts set targets for a company that has missed estimates in 3 of 4 quarters, so the target may be cut rather than reached.
Per-dimension breakdown
Quality
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.3 |
| Gross margin | 0.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 8.2 |
| Moat | 5.0 |
| Piotroski F | 8.9 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
- ▸Quality concerns
Growth
7.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.1 |
| EPS growth | 10.0 |
Momentum
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 9.6 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 5.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.4 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 45%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.6 |
| quality rank | 1.1 |
| growth rank | 1.9 |
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.0 |
| support resistance | 1.9 |
| 52w position | 5.0 |
| gap | 5.0 |
Risk (lower is worse)
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.1 |
| days to cover | 4.9 |
| volatility | 0.0 |
| put call | 4.4 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 4.8 |
| debt equity | 8.0 |
- ▸High IV: 83%
- ▸Above max pain $2
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 6.8 |
- ▸Earnings concerns: 0B/3M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (8)
- MOMENTUM:7.8>=5.5
- ASYMMETRY:1.6>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:30d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (0)
none
Reward-to-Risk
1.56
Upside
+23.4%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 50, MACD bullish
EdgeInst Constrain — Small cap ($0.5B) below institutional reach
SuitabilityAggressive — Beta 1.56>1.3, MCap $0.5B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects clean gate clearance against Momentum at 7.8 and asymmetric R:R of 1.56.
The strongest dimensions are Momentum at 7.8, Growth at 7.5, and Insider at 7.3; the weakest are Quality at 2.8, Catalyst at 3.4, and Technical at 3.7. The V9 engine cleared all gates, producing an asymmetric reward-to-risk of 1.56 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Weak Business Quality
Trip ifOverall quality score stays below 2.8 and fails to rise above 4.0 for 4 consecutive quarters.
- P2Repeated Earnings Misses
Trip ifQuarterly EPS exceeds -$0.10 (a smaller loss) in at least 2 consecutive quarters, versus -$0.22 now.
- P3Revenue Recovery Year Over Year
Trip ifQuarterly revenue falls below $240M from the current $265.4M.
- P4Breakout Momentum Setup
Trip ifMomentum score falls below 5.5 from the current 7.4.
- P5Analyst Target Upside
Trip ifAnalyst target falls below $15.50 so that upside drops below 5% from 27.0%.