Custom-engineered solutions manufacturer Methode Electronics (NYSE:MEI) announced better-than-expected revenue in Q1 CY2025, but sales fell by 7.3% year on year to $257.1 million. On the other hand, the company’s full-year revenue guidance of $950 million at the midpoint came in 9.1% below analysts’ estimates. Its non-GAAP loss of $0.77 per share was significantly below analysts’ consensus estimates.
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Methode Electronics (MEI) Q1 CY2025 Highlights:
- Revenue: $257.1 million vs analyst estimates of $228.8 million (7.3% year-on-year decline, 12.4% beat)
- Adjusted EPS: -$0.77 vs analyst estimates of $0.03 (significant miss)
- Adjusted EBITDA: -$7.1 million vs analyst estimates of $19.7 million (-2.8% margin, significant miss)
- EBITDA guidance for the upcoming financial year 2026 is $75 million at the midpoint, below analyst estimates of $95.47 million
- Operating Margin: -9.2%, down from -3.2% in the same quarter last year
- Free Cash Flow Margin: 10.2%, up from 5.7% in the same quarter last year
- Market Capitalization: $370.8 million
Management CommentsPresident and Chief Executive Officer Jon DeGaynor said, “The Methode transformation journey made further progress in the quarter, as we focused on improving execution to drive long-term value. We have built a new management team and set records for the quarter and the year in data center power product sales, with the year finishing at over $80 million. The year also provided a series of challenges both exogenous and endogenous. We experienced a significant ramp down in expected demand from one of our largest EV customers and delays with other EV customers. In fact, we finished the year with a challenging exercise to write down inventory primarily related to materials for reduced, delayed or canceled programs. While the team made clear strides in improving operational execution, the results were masked by factors that were either outside our immediate control or residual in nature which led to a larger than expected net loss for the quarter.”
Company Overview
Founded in 1946, Methode Electronics (NYSE:MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Methode Electronics struggled to consistently increase demand as its $1.05 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and is a sign of poor business quality.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Methode Electronics’s recent performance shows its demand remained suppressed as its revenue has declined by 5.7% annually over the last two years. Methode Electronics isn’t alone in its struggles as the Electrical Systems industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
This quarter, Methode Electronics’s revenue fell by 7.3% year on year to $257.1 million but beat Wall Street’s estimates by 12.4%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.
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Operating Margin
Methode Electronics was profitable over the last five years but held back by its large cost base. Its average operating margin of 6% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
Analyzing the trend in its profitability, Methode Electronics’s operating margin decreased by 15.2 percentage points over the last five years. Methode Electronics’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q1, Methode Electronics generated an operating margin profit margin of negative 9.2%, down 6 percentage points year on year. Since Methode Electronics’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Methode Electronics, its EPS declined by 18.8% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

Diving into the nuances of Methode Electronics’s earnings can give us a better understanding of its performance. As we mentioned earlier, Methode Electronics’s operating margin declined by 15.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Methode Electronics, its two-year annual EPS declines of 59.8% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q1, Methode Electronics reported EPS at negative $0.77, down from negative $0.23 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Methode Electronics’s full-year EPS of negative $1.15 will flip to positive $0.67.
Key Takeaways from Methode Electronics’s Q1 Results
We were impressed by how significantly Methode Electronics blew past analysts’ revenue expectations this quarter. On the other hand, its EPS and EBITDA missed along with its full-year revenue and EBITDA guidance. Overall, this was a weaker quarter. The stock traded down 11.2% to $9.13 immediately after reporting.
The latest quarter from Methode Electronics’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.