Methode Electronics, Inc. (NYSE:MEI)

CAPS Rating: 4 out of 5

The Company manufactures component devices worldwide for Original Equipment Manufacturers of automobiles, information processing and networking equipment, voice and data communication systems, consumer electronics and industrial equipment.

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Member Avatar Etirado (30.16) Submitted: 2/19/2014 10:41:01 PM : Outperform Start Price: $31.19 MEI Score: -4.77

3rd Party Recommendation

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Member Avatar EnigmaDude (93.19) Submitted: 10/7/2013 2:13:35 PM : Outperform Start Price: $28.06 MEI Score: +0.46

The Zacks Consensus Estimate for fiscal 2014 has risen 46.8% in the last 7 days to $1.49 per share, reflecting estimated year-over-year growth of 192.16%. For fiscal 2015, the Zacks Consensus Estimate increased 38.7% in the past 7 days to $1.90 per share, reflecting year-over-year growth of 27.29%.

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Member Avatar turningpoint84 (93.02) Submitted: 8/29/2013 10:14:06 AM : Outperform Start Price: $23.17 MEI Score: +22.99

Watch it climb.

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Member Avatar ScalaAnalyst (20.23) Submitted: 8/1/2013 8:18:55 AM : Outperform Start Price: $18.54 MEI Score: +63.41

Looking at their industry, I was almost ready not to review this stock. But it popped up on my radar, so, here is the first line from their summary:

Methode Electronics, Inc. engages in the design, manufacture, and marketing of components and subsystem devices worldwide. Its Automotive segment provides electronic and electro-mechanical devices and related products to automobile original equipment manufacturers."

As soon as it said "Automotive", I almost closed the web page. I'm not big on automotive industry. Not because I am against new car prices, or anything like that. It's just that with the American economy in a lurch, it is hard for me to believe you or any of your neighbours are going out to buy a new car. My newest car is a 94 Subaru, almost a 20 year classic. It's not even an American, but I do have a 74 Suburban classic that gets 12 mpg, so I helping the petroleum industry whenever I trailer my boat from the dry dock to the lake. But I'm digressing.

I decided to read on and I gathered this interesting information:

"The company's Interconnect segment offers copper and fiber-optic interconnect and interface solutions for the aerospace, appliance, commercial, computer, construction, consumer, material handling, medical, military, mining, networking, storage, and telecommunications markets. Its solutions include conductive polymers, connectors, custom cable assemblies, industrial safety radio remote controls, optical and copper transceivers, personal computer and express card packaging and terminators, solid-state field effect interface panels, and thick film inks; and services comprise the design and installation of fiber optic and copper infrastructure systems, and manufacturing active and passive optical components. "

Those are two impressive sentences. Try to say these two sentences together as if there was an and in the middle. So, they work the supply side of the automobile and other industries. Where do you put a thick film ink inside of a car anyway? But the idea of putting an optical cable in a car, that would be cool; I guess it is for the rear camera display that forces the car to break when it starts rolling onto a chipmunk or something. There was more interesting stuff in their summary, so I was impressed. But, consider, I'm easily attracted to chocolate as well.

I like to invest in technology. I believe American technology will always keep us in the leading edge of the economy and long as China keeps getting hacking into our corporate R and D labs, they will be right behind us as they acquire it by theft. I am an invesor, but also a computer programmer who works the database security and encryption sector side of the software industry.

So, I'm impressed with what MEI are doing, lets look "under the hood" in a company financial sense. Yes, there will a few more car puns coming up.

Stepping into the showroom, they have a MC of 701.14M, 52 week low to high range of 8.38/sh to 20.29, an ave exchange of share volume of 267K shares daily, PE of 17.49 and an EPS of 1.08, I've seen both higher back in the dot-com era. Oh and look, their is some icing on this vehicle, the have a dividend of 0.28/sh which computes to 1.5%. Not a lot, but 1.5% is a little better than my bank is offering for a CD. I could lick icing off a car if the was washed real clean and the frosting was, of course, chocolate.

I like to check out small cap companies as they have a better chance of doubling their company size than say a 30B dollar company. They also have a better chance of getting a buy out offer from a larger company, which would be an awesome home run hit I could put in my glove compartment. They have fallen in price a bit from 20.29/sh to currently 18.89/sh. Their share volume of 276K times their price 18.89/sh indicates that they move about 5.214M USD a day. Putting them in the trading liquidity for fund managers to take a serious look. Like the satellite dish guy says, "I could drive that all the way to the bank." To look at the PE and the EPS we need to look at their competitors.

On my screen I popped up AVX and MOLX. I need to look at MOLX as they do have some great products, but we are looking at MEI. MEI has a smaller MC of 701.1M, AVX at 2.1B and MOLX at 5.03B, so AVX is three time bigger and MOLX is 6 times bigger. Employees, blah, blah, blah. We could look at efficiency, but that is like looking at all the spark plugs in a car. I want to see how much power we got. Quarterly Rev Growth (yoy) is 0.17, -0.01 and 0.02, respectively to these companies. Well, MEI passed the competitors on this drag race.

Revenue (ttm), blah, blah, blah, because we need to Revenue growth not just what they made. Although we could look at efficiency like take the revenue and divide it by the number of employees. But that is simple math and too easy.

There is Gross Margin (ttm), EBITDA, Operating M., Net Income, but it is all relative to the size of the company.

Now EPS, 1.08, -0.38 and 1.45 puts MOLX in the lead, but, PE is 17.49, N/A (neg earnings) and 20.59, puts the price of MOLX a little high. So, MOLX has a good EPS but their PE is respectively higher. It's like comparing that Camero to that Corvette. Your pay for performance, and the Corvette, will be a little pricer. So, this puts PEG and Price/Sh higher for MOLX. I like to find performance and value. I'm talking about my stocks not the cars I own; my cars still run and get the job done.

My concern is that MOLX will grow and continue to grow, but how long will it double? So, I would put my bet on MEI doubling faster. I know it is just a hunch, but I've seen smaller companies double faster than large ones. And I have never see a very large company with an MC of 30B to 70B double in my life in 5 or less years. I like to play the small cap game.

There are other factors to consider. Earnings, Income statement, Balance Sheet, Cash Flow, and Inventory control. but I'm trying to keep this short and funny. I looked at them, and they are quite good, but you should look a little further under the hood to make a real financial decision. I don't want to write a very large article, but lets look at Earnings. To me that is the basic engine. You can study all the financial history of a stock, and in the end all you have is what the stock has done in the past. Is this a glimpse into the future, will this company supply electronic components to super intelligent cars in the future? Well, they may not build the George Jetson's flying car, but I'll be betting they will be making our automobiles more efficient for at least he next 2 to 3 years.

On Earnings

Their earnings from quarter to quarter seems to be quite steady these last few years, Their annual growth is quite nice but like most companies they have had their ups and downs. The company should be able meet or exceed earnings with the industry staying at least with a 12.5% growth, but I wouldn't bee surprised with a 20% growth. That would make this a great performer. They have managed to meet or beat street expectations these last few quarters and they analysts have raised their quarterly expectation from 0.19/sh to 0.20/sh and their annual from 1.04/sh to 1.27/sh for the next year. So, I'm impressed. I believe engine under the hood is quite strong enought for me.

So, if I'm going to buy this stock, I would do so if the price gets down to 18.80/sh or lower. I would collect this stock probably up to 20/sh, but if it floats to 40/sh I would sell it quickly. Now if the stock falls to 15/sh or 12/sh I would have to evaluate it and either buy more or sell this lemon, or just make lemonade.

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Member Avatar barryballs (60.83) Submitted: 7/17/2013 10:56:01 AM : Outperform Start Price: $19.11 MEI Score: +56.44

TECHNICALS

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Member Avatar line70day (< 20) Submitted: 6/22/2013 10:03:56 AM : Outperform Start Price: $28.45 MEI Score: +7.47

Shares up 3% fiscal Q4 earnings & revenue topped expectations . Sales gained 17% above forcast Net income was $ 0.27 a share up from $0.15 a yr earlier Adjusted EPS estimated of $0.15

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Member Avatar jermskirk (84.62) Submitted: 4/15/2013 10:17:12 AM : Outperform Start Price: $13.18 MEI Score: +127.46

automobile industry rebound, contract wins

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Member Avatar AQ1USN (59.49) Submitted: 6/25/2010 9:34:48 AM : Outperform Start Price: $8.97 MEI Score: +187.69

While the automotives are a major part of their sales, they also are diversified enough. The components they make go into a lot of different products. This will be supporting the improvement as the economy grows

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Member Avatar vernblythe (< 20) Submitted: 3/26/2010 12:27:17 PM : Outperform Start Price: $9.14 MEI Score: +195.33

methode is the supplier for the new rollout of Ford Sync one touch screen. If Ford rolls methode rolls.

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Member Avatar SmallCapsInvstr (94.42) Submitted: 5/3/2009 6:54:44 PM : Outperform Start Price: $5.25 MEI Score: +406.72

I really like this company. Going through a tough 2009 that may continue into 2010. Have bled through half their cash through 3 quarters in 2009 but on the plus side still have 0 debt. Luckily management did a very nice job of building cash flow in the past so they should be able to withstand the tough times ahead. A very nice margin of safety on this one even if 2009 FCF levels remain where they are. Will be adding this to my real world portfolio.

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Member Avatar Ibpurr (70.64) Submitted: 4/1/2009 9:42:13 PM : Outperform Start Price: $3.49 MEI Score: +718.40

Got lucky on this one and bought it a its 52 week low.

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Member Avatar Gromril (< 20) Submitted: 3/24/2009 3:32:54 AM : Underperform Start Price: $3.56 MEI Score: -694.16

Unless Car sales pick up sharply, this stock will underperform for about the next year or so

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Member Avatar SeekingReturns (41.99) Submitted: 3/5/2009 12:45:03 PM : Outperform Start Price: $2.86 MEI Score: +880.26

The dividend is safe, good cash position, little debt, etc., etc. I think this stock has been beaten down too much. I'm worried about exposure to autos, but the 8% will ease my concerns while I wait for things to turn around. Where can you get an 8% return these days w/o day trading?

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Member Avatar OtherOracleOfOMA (33.72) Submitted: 1/13/2009 9:49:19 PM : Outperform Start Price: $5.55 MEI Score: +375.75

Crazy short-term decline.

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Member Avatar WeenTang (57.48) Submitted: 10/9/2008 2:41:30 PM : Outperform Start Price: $6.17 MEI Score: +330.15

No debt, low P/E, and the kicker is they consistently kick out more cash from operations than net income.

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Member Avatar deperu10 (< 20) Submitted: 10/7/2008 7:46:55 AM : Outperform Start Price: $7.56 MEI Score: +251.22

FOLLOWING THE CROWD

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Member Avatar mleblanc123 (95.47) Submitted: 9/19/2008 8:42:00 AM : Outperform Start Price: $7.66 MEI Score: +275.97

Good cash position and low P/E. Very interesting

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Member Avatar NoTouch5Yr (99.13) Submitted: 5/22/2008 4:13:27 PM : Outperform Start Price: $9.89 MEI Score: +189.60

As with all my picks: A very attractive P/E, excellent EPS growth rate and high five year growth prospects.

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Member Avatar Moeskey (68.12) Submitted: 4/9/2008 7:33:07 PM : Outperform Start Price: $9.56 MEI Score: +197.59

Undervalued.

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Member Avatar StockTalking (< 20) Submitted: 9/1/2007 11:56:15 AM : Underperform Start Price: $12.50 MEI Score: -125.43

going to $15.

coundown to year end.

http://www.xolab.com

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