ME

Methode Electronics Inc

MEI
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Methode Electronics Inc AI Insights

Informational only. Not investment advice.
As of 2026-01-16

Snapshot

  • Revenue down 15.6% 1Y and -7.9% 3Y CAGR while operating at -2.2% margin TTM - structural decline, not cyclical[Total Revenue 1Y Growth]
  • Goodwill/intangibles of 402M = 59% of equity (679M) - impairment risk given deteriorating operations[Goodwill and Other Intangible Assets]
  • Trading at 0.27x P/S and 0.96x P/B vs industry median 3.0x P/S - priced for distress[P/S Ratio]

Watch Triggers

  • Total Revenue 1Y Growth: Turns positive or stabilizes above -5% — Revenue stabilization is prerequisite for turnaround thesis - current -15.6% is unsustainable
  • EBITDA TTM: Falls below 25M (1.1x interest coverage) — Covenant breach risk escalates; refinancing becomes difficult or dilutive
  • Free Cash Flow TTM: Turns negative — Only positive metric - loss of FCF removes turnaround optionality and liquidity buffer

Bull Case

Deep value at 0.27x P/S and 0.96x P/B with 52M FCF - any revenue stabilization creates significant upside from 266M market cap

P/S RatioP/B RatioFree Cash Flow TTM

Tangible book value 277M exceeds market cap 266M - asset floor provides downside protection if liquidation value holds

Tangible Book ValueMarket Cap TTM

Bear Case

Revenue declining -7.9% 3Y CAGR with negative operating margin (-2.2%) - no evidence of bottom; could be value trap

Total Revenue 3Y GrowthOperating Margin TTM

EBITDA/interest of 1.5x leaves no margin for error - one bad quarter could trigger covenant issues on 355M debt

EBITDA TTMInterest Expense TTMTotal Debt

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
35%

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Forward Thesis

FCF positive (52M TTM) despite losses suggests turnaround optionality if revenue stabilizes

1-3ylow
  • FCF margin 5.3% despite -6.4% net margin
  • Working capital of 338M provides runway
  • Capex only 2.9% of revenue - minimal reinvestment needed
FCF TTM: 52.3M positiveNet loss TTM: -62.9MCash: 118.5M vs current debt 0.2M

Debt load (355M, 0.52x D/E) manageable but interest coverage critical at 1.5x EBITDA

3-12mmed
  • Interest expense 22.6M vs EBITDA 33.7M
  • Long-term debt 348M with minimal current maturities
  • Covenant breach risk if EBITDA deteriorates further
EBITDA/Interest: 1.5xCurrent debt only 0.2MD/E 0.52 below distress levels
Valuation Context
Caveats

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