What's In Store For Methode Electronics (MEI) In Q3 Earnings?

Methode Electronics, Inc. price-eps-surprise | Methode Electronics, Inc. Quote

Key Factors to Consider

Methode Electronics’ top line is expected to have been adversely affected by weaker auto sales, lower industrial equipment purchases and lower planned sales as well as the impact of weaker foreign currencies.

In second-quarter fiscal 2020, sales were dampened by $32 million due to United Auto Workers (UAW) labor strike at General Motors (NYSE:GM) and currency rate fluctuations, which hurt sales by $3.9 million.

The trend is expected to have continued in the to-be reported quarter. Notably, Methode Electronics has lowered its fiscal 2020 sales guidance from $1.13 billion-$1.17 billion to $1.10 billion-$1.13 billion.

Nevertheless, strong adoption for the company’s advanced technology products is a key catalyst. Increasing demand for its magneto-elastic sensor technology, digital instrument cluster offering and electric vehicle technology are expected to have boosted auto revenues in the to-be reported quarter.

Further, Methode Electronics’ Industrial segment is expected to have benefited from Grakon’s robust performance in the heavy-truck and bus market for the to-be-reported quarter.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Methode Electronics carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are three more stocks you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat this season.

Tencent Holding Ltd. (OTC:TCEHY) has an Earnings ESP of +6.03% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Guidewire Software, Inc. (NYSE:GWRE) has an Earnings ESP of +15.38% and a Zacks Rank #3.

CrowdStrike Holdings Inc. (NASDAQ:CRWD) has an Earnings ESP of +5.26% and a Zacks Rank #3.

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