Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Methode Electronics, Inc. (NYSE:MEI) due to its excellent fundamentals in more than one area. MEI is a financially-robust company with a a great track record high-grade dividend payments, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, take a look at the report on Methode Electronics here.
Very undervalued with adequate balance sheet and pays a dividend
MEI's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that MEI manages its cash and cost levels well, which is a key determinant of the company’s health. MEI appears to have made good use of debt, producing operating cash levels of 0.31x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. MEI's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if MEI's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the electronic industry, MEI is also trading below its peers, relative to earnings generated. This supports the theory that MEI is potentially underpriced.
MEI is also a dividend company, with ample net income to cover its dividend payout, which has been consistently growing over the past decade, keeping income investors happy.
For Methode Electronics, I've compiled three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for MEI’s future growth? Take a look at our free research report of analyst consensus for MEI’s outlook.
- Historical Performance: What has MEI's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of MEI? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.