Is Methode stock a reasonably safe long-term investment?
Earnings season may still have a few tricks up its sleeve. Methode Electronics, Inc. (NYSE:MEI) is a global supplier of mechatronic products such as LED lighting systems, power distribution and sensor applications. The business operates in the automotive, industrial, and medical segments.
The company will report earnings before the market opens tomorrow, Sept. 2. Ahead of the event, MEI has a rather muted history of post-earnings reactions. While six of the last eight quarters have yielded post-earning moves higher, the average move the last two years has only come out to a quiet 3.8%. This time around, the options market is pricing in a larger-than-usual 5.6% for tomorrow's trading.
MEI is up 21.8% in 2021, and 60% year-over-year. The shares have spent the last few months consolidating below their July 2 record high of $50.19, but remain a far cry from their Sept. 23 annual low of $23.97. Methode Electronics also offers a forward dividend of $0.56 and a dividend yield of 1.20%.
Methode Electronics has solid fundamentals and a decent valuation. The stock trades at an attractive price-earnings ratio of 14.60 and has a strong price-sales ratio of 1.69. In addition, Methode Electronics’ revenues are up 20% since fiscal 2018. Even more importantly, MEI's net income has increased 114% since fiscal 2018. Methode Electronics' balance sheet is also manageable with $233.2 million in cash and $264.9 million in total debt. Overall, Methode stock offers consistency, stability, and minimal risk for long-term investors.