Methode Story

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MEI -- USA Stock  

USD 38.29  1.67  4.18%

As many rational traders are trying to avoid technology space, it makes sense to concentrate on Methode Electronics a little further and understand how it stands against Fabrinet and other similar entities. We are going to examine some of the competitive aspects of both Methode and Fabrinet.
Published over a month ago
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Will Methode Electronics (NYSE:MEI) shadow Fabrinet price upswing?
By analyzing existing basic indicators between Methode Electronics and Fabrinet, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Fabrinet with a short position in Methode Electronics. Check out our pair correlation module for more information.

Let's begin by analyzing the assets. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Methode Electronics has an asset utilization ratio of 144.02 percent. This implies that the company is making $1.44 for each dollar of assets. An increasing asset utilization means that Methode Electronics is more efficient with each dollar of assets it utilizes for everyday operations.
Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two companies, such as Methode or Fabrinet is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.

UNDERSTANDING Methode Electronics dividends

A dividend is the distribution of a portion of Methode Electronics earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. Methode Electronics dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. Methode one year expected dividend income is about $0.22 per share.
Methode Electronics Dividend Yield is most likely to increase slightly in the upcoming years. The last year's value of Dividend Yield was reported at 0.012. The current Dividends per Basic Common Share is estimated to increase to 0.38, while Payment of Dividends and Other Cash Distributions is projected to decrease to (14.6 M).
Last ReportedProjected for 2021
Payment of Dividends and Other Cash Distributions-13.5 M-14.6 M
Dividend Yield 0.012  0.0132 
Dividends per Basic Common Share 0.36  0.38 
Investing in dividend-paying stocks, such as Methode Electronics is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in Methode Electronics must own a stock before its ex-dividend date to receive its next dividend. This type of analysis is very useful when you want to generate a past dividend schedule and payout information for Methode Electronics. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

How important is Methode Electronics's Liquidity

Methode Electronics financial leverage refers to using borrowed capital as a funding source to finance Methode Electronics ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Methode Electronics financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Methode Electronics's total debt and its cash.

Correlation Between Methode and Fabrinet

In general, stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Methode Electronics together with similar or unrelated positions with a negative correlation. For example, you can also add Fabrinet to your portfolio. If Fabrinet is not perfectly correlated to Methode Electronics it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Methode Electronics for example, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down. Please check pair correlation details between MEI and FN for more information.

Note

Are you currently holding both Methode Electronics and Fabrinet in your portfolio? Please note if you are using this as a pair-trade strategy between Methode Electronics and Fabrinet, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses.

Methode Electronics exotic insider transaction detected

Legal trades by Methode Electronics insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Methode insider trading alert for general transaction of common stock by Ronald Tsoumas, VP Finance and CFO, on 31st of December 2020. This event was filed by Methode Electronics Inc with SEC on 2020-12-31. Statement of changes in beneficial ownership - SEC Form 4. Ronald Tsoumas currently serves as vice president, corporate finance and chief financial officer of Methode Electronics [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

A Deeper look at Methode

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Lets now check Methode Electronics revenue. Based on the latest financial disclosure, Methode Electronics reported 944.6 M of revenue. This is 76.82% lower than that of the Technology sector and 38.61% lower than that of the Electronic Components industry. The revenue for all United States stocks is 89.99% higher than that of Methode Electronics. As for Fabrinet we see revenue of 1.68 B, which is 9.18% higher than that of the Electronic Components

Methode944.6 Million
Sector1.54 Billion
Fabrinet1.68 Billion
944.6 M
Methode
1.5 B
Sector
1.7 B
Fabrinet

Methode technical analysis implies possible correction

The treynor ratio is down to 0.32 as of today. Methode Electronics currently demonstrates below-verage downside deviation. It has Information Ratio of 0.09 and Jensen Alpha of 0.27. However, we do advice investors to further question Methode Electronics expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Final Take On Methode Electronics

While some other entities within the electronic components industry are still a little expensive, even after the recent corrections, Methode Electronics may offer a potential longer-term growth to stockholders. The bottom line, as of the 3rd of December 2020, our final 30 days buy-hold-sell recommendation on the company is Strong Buy. We believe Methode Electronics is undervalued with below average odds of distress for the next two years.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Methode Electronics. Please refer to our Terms of Use for any information regarding our disclosure principles.

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