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Are Investors Undervaluing Methode Electronics (MEI) Right Now?
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Methode Electronics (MEI - Free Report) . MEI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 14.06 right now. For comparison, its industry sports an average P/E of 25.53. MEI's Forward P/E has been as high as 14.73 and as low as 10.72, with a median of 12.95, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MEI has a P/S ratio of 1.41. This compares to its industry's average P/S of 2.69.
Finally, investors will want to recognize that MEI has a P/CF ratio of 10.57. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MEI's current P/CF looks attractive when compared to its industry's average P/CF of 21.88. Over the past year, MEI's P/CF has been as high as 11.23 and as low as 8.36, with a median of 9.84.
These are just a handful of the figures considered in Methode Electronics's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MEI is an impressive value stock right now.