Methode Electronics, Inc. Just Missed Earnings With A Surprise Loss - Here Are Analysts Latest Forecasts
There's been a major selloff in Methode Electronics, Inc. (NYSE:MEI) shares in the week since it released its third-quarter report, with the stock down 35% to US$14.12. Revenues fell 9.9% short of expectations, at US$260m. Earnings correspondingly dipped, with Methode Electronics reporting a statutory loss of US$0.33 per share, whereas the analysts had previously modelled a profit in this period. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Methode Electronics after the latest results.
See our latest analysis for Methode Electronics
Following the recent earnings report, the consensus from three analysts covering Methode Electronics is for revenues of US$1.06b in 2025. This implies a discernible 6.5% decline in revenue compared to the last 12 months. Methode Electronics is also expected to turn profitable, with statutory earnings of US$0.30 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.16b and earnings per share (EPS) of US$1.26 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
The consensus price target fell 42% to US$16.50, with the weaker earnings outlook clearly leading valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Methode Electronics at US$17.00 per share, while the most bearish prices it at US$16.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Methode Electronics' past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 5.2% annualised decline to the end of 2025. That is a notable change from historical growth of 3.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. It's pretty clear that Methode Electronics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Methode Electronics' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Methode Electronics analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Methode Electronics that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
