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Is Methode Electronics (MEI) Stock Undervalued Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Methode Electronics (MEI - Free Report) . MEI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 13.27 right now. For comparison, its industry sports an average P/E of 24.24. MEI's Forward P/E has been as high as 16.06 and as low as 12.31, with a median of 13.35, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MEI has a P/S ratio of 1.39. This compares to its industry's average P/S of 2.58.

Finally, we should also recognize that MEI has a P/CF ratio of 10.04. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. MEI's current P/CF looks attractive when compared to its industry's average P/CF of 21.89. Over the past year, MEI's P/CF has been as high as 11.04 and as low as 8.61, with a median of 9.99.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Methode Electronics is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MEI feels like a great value stock at the moment.


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