MEI · Methode Electronics
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $18.26
Note written ·
Price against the kill line
35.2% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $18.26, on record since 11 November 2026. The shares are down 34.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $18.26, the highest close of the last 63 sessions (1 September 2026), would show the shares leading the S&P 500. So would a raised fiscal 2027 adjusted EBITDA guide above $82 million.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 1 August 2026, filed 2 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 265
- Revenue, change on a year (%)
- +10.4
- Gross margin (%)
- 18.0
- Operating margin (%)
- −1.5
- Free cash flow, four quarters ($M)
- −13.3
- Net cash, cash less debt ($M)
- −194
- Enterprise value to sales (×)
- 0.6
- Enterprise value to operating income (×)
- 162.1
All filed numbers
What Methode Electronics reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 265 | +10.4 | 18.0 | −1.5 |
| first filed | 298 | +15.9 | 24.2 | 3.7 |
| first filed | 234 | −2.6 | 16.6 | −2.6 |
| first filed | 247 | −15.6 | 19.3 | 1.2 |
| first filed | 241 | −7.0 | 18.1 | 0.5 |
| first filed | 257 | −7.3 | 7.6 | −9.2 |
| Pre-tax income ($M) | −7.3 |
| Net income ($M) four quarters: −36.8 | −11.4 |
| Diluted shares, change on a year (%) against the quarter to 2 August 2025 | +0.9 |
| Operating cash flow ($M) | 5.1 |
| Capital spending ($M) | 18.4 |
| Free cash flow ($M) | −13.3 |
| Cash and short-term investments ($M) | 116 |
| Debt ($M) long-term debt | 311 |
| Net cash, cash less debt ($M) | −194 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 256 |
| Inventory ($M) | 185 |
| Shareholders' equity ($M) | 663 |
| Market value ($M) | 422 |
| Enterprise value, market value plus net debt ($M) | 616 |
| Enterprise value to sales (×) | 0.6 |
| Enterprise value to operating income (×) | 162.1 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 0.6 |
| Free-cash-flow yield (%) | −3.2 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 9.7% of shares outstanding sold short, 5.3 days of average trading to cover, +11.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $0 |
The thesis
Methode Electronics is more likely to lag the S&P 500 than lead it over the next three months. Its data-center power case has an unexplained 23.4% one-day fall to a $10.16 close on 5 November 2026 hanging over it, and the shares have only partly recovered, to $12.70 on 11 November 2026. The fiscal second-quarter report, estimated for about 2 December 2026, decides whether the $72–$82 million adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) guide for fiscal 2027 survives.
The shares closed at $13.27 on 4 November 2026 and $10.16 on 5 November 2026, then rebounded through $10.76 on 6 November 2026, $12.13 on 9 November 2026 and $11.86 on 10 November 2026. Searches of financial news through 12 November 2026 found no company announcement, guidance change or named analyst downgrade behind the fall or the rebound. The company's last financial update is the 2 September 2026 report, so the price has swung far more than the disclosed business has.
The three-month change in adjusted closes is −23.8% as of 11 November 2026.
Bullish and bearish views on Methode Electronics
The bull case on Methode Electronics (MEI), in brief: reported sales beat expectations. The bear case: the November fall has no public explanation.
Bull case
- Reported sales beat expectations. Sales for the quarter ended 1 August 2026 were $265.4 million, up 10.4%, against a $238.31 million consensus shown by MarketBeat. Industrial segment sales rose 27.0% to $156.8 million (company release, 2 September 2026).
- Guidance stands as last published. On 2 September 2026 the company affirmed fiscal 2027 net sales of $1.025–$1.075 billion and adjusted EBITDA of $72–$82 million. Financial news through 12 November 2026 shows no revision.
- New business is not yet in revenue. On the 2 September 2026 call the CEO disclosed non-data-center awards worth $75 million of peak annual revenue, with the ramp in late fiscal 2028. The 800-volt power architecture sits outside guidance and has no customer award yet.
- A large outside holder added shares. MarketBeat reported on 6 November 2026 that AIGH Capital Management raised its stake 18.1% in the third calendar quarter to 1,982,420 shares, about 5.56% of the company. The filing covers a period before the November fall.
- Insider filings show no open-market selling. SEC Form 4 filings dated 3 November 2026 record small director share grants at $14.72. Form 4s for the Chief Financial Officer (5 October 2026) and two other officers (3 September 2026, 14 September 2026) record dispositions to the company, not market sales.
Bear case
- The November fall has no public explanation. The shares lost 23.4% in the session of 5 November 2026, from a $13.27 close to $10.16. No company filing or news item names a cause, so a customer or program problem remains possible until the next report.
- Profit has not followed sales. Adjusted EBITDA fell to $13.7 million (5.2% margin) from $15.7 million a year earlier, and the net loss was $11.4 million (company release, 2 September 2026). MarketBeat listed analysts' expected loss at $0.81 per share for the current year on 6 November 2026.
- Debt is large against equity value. Net debt was $194.3 million at 1 August 2026, and first-quarter free cash flow was a $10.9 million outflow. MarketBeat put market value at $361.85 million on 6 November 2026.
- Analyst targets sit far above the price. MarketBeat's consensus target was $22.00 on 6 November 2026, against a $12.70 close on 11 November 2026. Coverage is thin, so a few targets set the average.
- Customer concentration raises the stakes. The five largest customers were about 41% of fiscal 2026 net sales and one alone was 10.9%, per a summary of the annual report. Data-center revenue is not reported separately, so outsiders cannot size that exposure.
- Reports have moved the shares sharply. The shares fell about 11% after the 4 December 2025 report and 14.9% in March 2026, when adjusted EBITDA guidance was cut to a $60 million midpoint (Motley Fool, StockStory).
Price setup
The shares closed at $12.70 on 11 November 2026. That is 37.7% below the 52-week intraday high of $20.38 reached on 29 June 2026, and above the 52-week closing low of $5.05 on 16 March 2026.
The close sits below the 50-day moving average of $14.04 and above the 200-day moving average of $11.78, both as of 11 November 2026. The shares closed below the 200-day average on 5 November 2026 ($10.16) and 6 November 2026 ($10.76), then back above it on 9 November 2026 ($12.13) and 10 November 2026 ($11.86). The $10.16 close on 5 November 2026 is the low of the recent drop.
Six sessions between 4 November 2026 and 11 November 2026 moved the price within a $10.16–$13.27 closing range, so no single close settles the direction. The next company event with a figure attached is the fiscal second-quarter report. A report that holds the $72–$82 million guide and lifts the first-quarter 5.2% margin would work against the lag view. A guide cut would confirm it.
Catalysts ahead
- ~25 November 2026 (est.): Announcement of the fiscal second-quarter results date and call details. The Q1 fiscal 2027 notice came on 26 August 2026, a week before the 2 September 2026 report, and last year's Q2 notice came on 26 November 2025; the notice fixes when the guidance test arrives.
- ~2 December 2026 (est.): Fiscal second-quarter 2027 results and call; last year's call was on 4 December 2025. Settles whether the $72–$82M adjusted EBITDA guide survives, whether margin moves above 5.2%, and whether free cash flow turns positive.
- ~17 December 2026 (est.): Investor Day at the New York Stock Exchange, per MarketBeat and MarketScreener calendars. The next scheduled forum after the report for management to defend the data-center case and address the November fall.
What would change the view
A daily close above $18.26, the highest close of the last 63 sessions (1 September 2026), would show the shares leading the S&P 500. So would a raised fiscal 2027 adjusted EBITDA guide above $82 million.
What it trades with
Sales come from two end markets. Industrial, at $156.8 million, carries data-center power and lighting, and Automotive contributed $105.7 million in the quarter ended 1 August 2026. The shares can therefore react both to cloud-spending news and to vehicle-program news.
MarketBeat listed a beta of 1.60 against the broad market on 6 November 2026, and Webull counted 51 moves of more than 5% in the last year. Whether data-center power peers moved on 4 November 2026 and 5 November 2026 was not established, so the fall is not attributed to a sector move.
The evidence, claim by claim (7)
- Q1 fiscal 2027 net sales $265.4M, up 10.4%; Industrial $156.8M, up 27.0%; Automotive $105.7M, down 0.4%; quarter ended 1 August 2026. Methode Electronics Q1 fiscal 2027 results release · as of
- Adjusted EBITDA $13.7M (5.2% margin) versus $15.7M a year earlier; net loss $11.4M; free cash flow outflow $10.9M. Methode Electronics Q1 fiscal 2027 results release · as of
- Total debt $310.5M, cash $116.2M, net debt $194.3M at quarter-end. Methode Electronics Q1 fiscal 2027 results release · as of
- Fiscal 2027 guidance affirmed: net sales $1.025B–$1.075B, adjusted EBITDA $72M–$82M, capital expenditures $25M–$30M. Methode Electronics Q1 fiscal 2027 results release (Form 8-K exhibit) · as of
- Four directors received small share grants at $14.72 on 30 October 2026 and 31 October 2026; no open-market insider sales appear among the itemised Form 4 filings since 14 August 2026. SEC Form 4 filings, filed 3 November 2026 · as of
- AIGH Capital Management raised its stake 18.1% in the third quarter to 1,982,420 shares, about 5.56% of the company. MarketBeat summary of institutional filing · as of
- MarketBeat listed a $22.00 consensus price target, market value of $361.85M and a beta of 1.60. MarketBeat stock page · as of
Sources
- Methode Electronics, Inc. Reports Fiscal 2027 First Quarter Financial Results · seekingalpha.com
- METHODE ELECTRONICS INC - Form 8-K - FY2026 · sec.gov
- Methode Electronics, Inc. $MEI Stock Bought by AIGH Capital Management LLC · marketbeat.com ·
- Methode Electronics (MEI) Stock Price, News & Analysis $MEI · marketbeat.com
- ir.methode.com
- Calendar Methode Electronics Nasdaq · marketscreener.com
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