Value
7.4/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 5.3 |
| Fwd P/E | 2.9 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 36.3x
- ▸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 electronic-components maker with repeated earnings misses, no moat and a 40% drawdown. The analyst target implies 54.3% upside from an oversold price, but that depends on earnings stabilizing first.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Business quality is weak at 2.8 out of 10, with no competitive moat and margin and return scores of zero. Quality breakdown | Quality should stay below average until the company returns to positive operating margin. | →Stable |
| CounterA Piotroski F-Score of 8/9 and a high current ratio suggest the balance sheet is stable and fundamentals are improving. | ||
Earnings are consistently disappointing: 3 misses and no beats in the last four quarters, with the latest EPS of -0.22 against a -0.20 estimate and a worst surprise of -85%. Earnings | Losses per share should narrow toward estimates; the next report is December 2. | →Stable |
| CounterThe latest miss was small (-0.22 versus -0.20) and losses have narrowed from -0.37 in March, so the trend may be improving. | ||
The price of $12.12 is 54.3% below the $18.70 analyst target, against 15.0% downside to the stop, a reward-to-risk of 3.62. Upside pct | The stock should close part of the gap to the target if earnings stabilize over the next 12 months. | →Stable |
| CounterAnalyst targets lag a deteriorating earnings record, and the gap may close through target cuts rather than price gains. | ||
The stock is oversold (RSI 26) and about 40% off its 52-week high, but falling on-balance volume shows distribution despite price staying above the 200-day average. Momentum breakdown | The price should hold above its 200-day average and volume distribution should reverse for a bounce to hold. | ↑Improving |
| CounterFalling on-balance volume and a momentum score of 4.2 show sellers still in control, so an oversold reading may not mark a bottom. | ||
The data labels the stock attractively valued with a PEG ratio of 0.21 and institutions accumulating, even though the forward P/E is 29.6x. Valuation breakdown | Forward earnings should recover enough to bring the forward P/E down from 29.6x. | →Stable |
| CounterA forward P/E of 29.6x on depressed earnings is not cheap, and a low PEG depends on growth forecasts that have repeatedly been missed. | ||
Business quality is weak at 2.8 out of 10, with no competitive moat and margin and return scores of zero.
→StableQuality breakdown
- Expectation
- Quality should stay below average until the company returns to positive operating margin.
CounterA Piotroski F-Score of 8/9 and a high current ratio suggest the balance sheet is stable and fundamentals are improving.
Earnings are consistently disappointing: 3 misses and no beats in the last four quarters, with the latest EPS of -0.22 against a -0.20 estimate and a worst surprise of -85%.
→StableEarnings
- Expectation
- Losses per share should narrow toward estimates; the next report is December 2.
CounterThe latest miss was small (-0.22 versus -0.20) and losses have narrowed from -0.37 in March, so the trend may be improving.
The price of $12.12 is 54.3% below the $18.70 analyst target, against 15.0% downside to the stop, a reward-to-risk of 3.62.
→StableUpside pct
- Expectation
- The stock should close part of the gap to the target if earnings stabilize over the next 12 months.
CounterAnalyst targets lag a deteriorating earnings record, and the gap may close through target cuts rather than price gains.
The stock is oversold (RSI 26) and about 40% off its 52-week high, but falling on-balance volume shows distribution despite price staying above the 200-day average.
↑ImprovingMomentum breakdown
- Expectation
- The price should hold above its 200-day average and volume distribution should reverse for a bounce to hold.
CounterFalling on-balance volume and a momentum score of 4.2 show sellers still in control, so an oversold reading may not mark a bottom.
The data labels the stock attractively valued with a PEG ratio of 0.21 and institutions accumulating, even though the forward P/E is 29.6x.
→StableValuation breakdown
- Expectation
- Forward earnings should recover enough to bring the forward P/E down from 29.6x.
CounterA forward P/E of 29.6x on depressed earnings is not cheap, and a low PEG depends on growth forecasts that have repeatedly been missed.
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
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 3.6 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.3 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.5 |
| erm sentiment | 5.2 |
- ▸Analyst upside: 48%
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
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.6 |
| quality rank | 1.1 |
| growth rank | 2.1 |
Technical
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 2.7 |
| 52w position | 4.7 |
| gap | 5.0 |
Risk (lower is worse)
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.1 |
| days to cover | 4.9 |
| volatility | 0.0 |
| put call | 8.3 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 4.8 |
| debt equity | 8.0 |
- ▸High IV: 91%
- ▸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:6.1>=5.5
- ASYMMETRY:1.7>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (0)
none
Reward-to-Risk
1.70
Upside
+25.5%
Downside
15.0%
Sizing output
AVOID
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
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 Growth at 7.5 and asymmetric R:R of 1.70.
The strongest dimensions are Growth at 7.5, Value at 7.4, and Insider at 7.3; the weakest are Quality at 2.8, Catalyst at 3.4, and Technical at 4.0. The V9 engine cleared all gates, producing an asymmetric reward-to-risk of 1.70 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Repeated Earnings Misses
Trip ifEPS surprise exceeds 0% for 2 consecutive quarters.
- P2Weak Quality No Moat
Trip ifQuality score rises above 4.5 from the current 2.8.
- P3Large Upside To Target
Trip ifUpside to the analyst target falls below 15% from the current 54.3%.
- P4Oversold With Distribution
Trip ifPrice falls below the $11.48 stop level, more than 5% below the current $12.12.
- P5Valuation And Institutional Support
Trip ifForward P/E exceeds 40x from the current 29.6x.