Methode Electronics Q2 Earnings Preview: What to Expect

Methode Electronics (MEI) will report Q2 earnings on Wednesday after market hours. Analysts expect a 16.1% YoY decline in revenue to $217 million and an adjusted loss of $0.25 per share. Despite missing Wall Street's revenue estimates four times in the last two years, the majority of analysts have reconfirmed their estimates, suggesting the company is expected to stay the course. Methode Electronics' peers in the electrical systems segment have reported mixed results, with some beating estimates and others missing. The company's share price has risen 23.9% in the last month, with an average analyst price target of $9.50.

Title: Methode Electronics (MEI) Q2 Earnings: Analysts Expect Revenue Decline Amid Transformation

Methode Electronics (MEI) will report its Q2 earnings on Wednesday after market hours. Analysts predict a 16.1% year-over-year (YoY) decline in revenue to $217 million, with an adjusted loss of $0.25 per share. Despite missing Wall Street's revenue estimates four times in the last two years, the majority of analysts have reconfirmed their estimates, indicating the company is expected to stay the course.

Methode Electronics has been undergoing a significant transformation, marked by efforts to stabilize operations and position for future growth, particularly in the data center and electric vehicle (EV) sectors. The company's Q4 2025 earnings call summary revealed that while facing considerable headwinds in the automotive EV market, Methode Electronics demonstrated resilience through operational improvements and strategic adjustments [1].

The company reported net sales of $257.1 million for the fourth quarter of fiscal year 2025, a 7% decrease year-over-year compared to $277.3 million in the prior year. Sequentially, sales saw a 7% increase from the third quarter, driven by strong performance in power products for data center applications. However, the company faced challenges from the roll-off of large automotive programs and reduced sales in commercial vehicle and off-road lighting applications.

Despite these challenges, Methode Electronics achieved a record full year in data center power products, with sales exceeding $80 million, nearly doubling fiscal 2024 sales. The company also generated positive free cash flow for the full year, driven by working capital reduction and tolling recovery.

In Q2, analysts expect a continuation of the company's transformation efforts, including operational improvements and cost reductions. The company has improved its gross margin by 100 basis points year-over-year in FY2025 and achieved $9 million in SG&A reductions. Additionally, Methode Electronics has secured $12 million in tolling recoveries and reduced freight costs by $11 million.

Methode Electronics' peers in the electrical systems segment have reported mixed results, with some beating estimates and others missing. The company's share price has risen 23.9% in the last month, with an average analyst price target of $9.50.

The near-term outlook for EV sales remains soft, particularly in North America, due to weaker market demand and program launch delays. However, the company remains bullish on the long-term megatrend of electrification and expects a significant rebound in EV sales in fiscal year 2027.

Methode Electronics faces several risks and challenges, including EV market volatility, inventory adjustments, historical warranty and quality issues, and potential future tariff announcements. The company's ongoing efforts to improve operations, supply chain, and product launch capabilities are crucial for navigating these challenges.

References
[1] https://www.datainsightsmarket.com/companies/MEI