What Happened?
Shares of custom-engineered solutions manufacturer Methode Electronics (NYSE:MEI) fell 28.4% in the afternoon session after the company reported weak third-quarter (fiscal 2025) results: revenue, EPS, and EBITDA all missed Wall Street's estimates, and next quarter's revenue guidance came in below expectations. The key highlight for the quarter was the ongoing weakness in the automotive segment, where sales dropped over 17% due to the phase-out of older EV lighting programs, combined with a broader slowdown in new EV model launches. This decline more than offset growth in the industrial segment, where power products for data centers saw strong demand.
Looking ahead, revenue guidance for the fourth quarter suggests flat to modest growth. Overall, this was a tough quarter, weighed down by auto-sector struggles.
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What The Market Is Telling Us
Methode Electronics’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. But moves this big are rare even for Methode Electronics and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 33% on the news that the company reported impressive third-quarter earnings that blew past analysts' revenue, EPS, and EBITDA expectations. Sales were driven by higher volumes of power distribution products for data centers. However, the business also observed some softness in the automotive market in Asia. Looking ahead, the company reaffirmed its sales target for the full year (fiscal 2025) while raising its operating income guidance, reflecting a more optimistic outlook. Zooming out, we think this quarter featured some important positives.
Methode Electronics is down 40.6% since the beginning of the year, and at $7.03 per share, it is trading 66.6% below its 52-week high of $21.04 from March 2024. Investors who bought $1,000 worth of Methode Electronics’s shares 5 years ago would now be looking at an investment worth $232.35.
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