Methode Electronics, Inc. (NYSE:MEI) Just Reported, And Analysts Assigned A US$9.50 Price Target
Methode Electronics, Inc. (NYSE:MEI) investors will be delighted, with the company turning in some strong numbers with its latest results. Methode Electronics beat expectations with revenues of US$247m arriving 3.9% ahead of forecasts. The company also reported a statutory loss of US$0.28, 6.7% smaller than was expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the consensus from Methode Electronics' three analysts is for revenues of US$953.1m in 2026, which would reflect a noticeable 3.2% decline in revenue compared to the last year of performance. Losses are predicted to fall substantially, shrinking 46% to US$0.96. Before this latest report, the consensus had been expecting revenues of US$946.1m and US$0.82 per share in losses. While this year's revenue estimates held steady, there was also a considerable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
See our latest analysis for Methode Electronics
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 7.3% to US$9.50, with the analysts signalling that growing losses would be a definite concern. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Methode Electronics analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$9.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Methode Electronics is an easy business to forecast or the the analysts are all using similar assumptions.
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. One more thing stood out to us about these estimates, and it's the idea that Methode Electronics' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 6.3% to the end of 2026. This tops off a historical decline of 1.0% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 10% per year. So while a broad number of companies are forecast to grow, unfortunately Methode Electronics is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Methode Electronics. On the plus side, there were no major changes to revenue estimates; although 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Methode Electronics analysts - going out to 2027, and you can see them free on our platform here.
You still need to take note of risks, for example - Methode Electronics has 1 warning sign we think you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.