What Happened?
Shares of custom-engineered solutions manufacturer Methode Electronics (NYSE: MEI) jumped 3.5% in the pre-market session as investors awaited a busy week of corporate earnings reports. With no significant, market-moving news released by the company, its shares appeared to be lifted by the overall positive market sentiment. U.S. stock futures pointed to a higher open, creating a positive environment for investors. Notably, the earnings season got off to a strong start: More than 85% of the S&P 500 stocks that reported earnings exceeded expectations, according to FactSet data. This robust performance fueled positive sentiment, suggesting that corporate profitability remained resilient despite ongoing economic uncertainties.
After the initial pop the shares cooled down to $6.60, down 0.3% from previous close.
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What Is The Market Telling Us
Methode Electronics’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock dropped 23.6% on the news that the company reported a wider-than-expected fourth-quarter loss and issued a disappointing financial outlook for fiscal 2026.
The electronic components maker posted a fourth-quarter adjusted loss of $0.77 per share on revenue of $257.1 million. This was a significant decline from the prior year, driven by lower volumes in its Automotive segment.
Looking ahead, Methode provided a grim forecast for its 2026 fiscal year, anticipating net sales between $900 million and $1 billion. The company attributed the expected sales decline of approximately $100 million to reduced demand for electric vehicles (EVs), particularly from a major customer, Stellantis. This guidance, which signals ongoing business challenges, appeared to overshadow some positive news, including record sales for its data center power products and a newly declared quarterly dividend.
Methode Electronics is down 44.2% since the beginning of the year, and at $6.60 per share, it is trading 52.9% below its 52-week high of $14.02 from December 2024. Investors who bought $1,000 worth of Methode Electronics’s shares 5 years ago would now be looking at an investment worth $224.47.
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