Methode Electronics (MEI) Is Weak On High Volume Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Methode Electronics ( MEI) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Methode Electronics as such a stock due to the following factors:

  • MEI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.5 million.
  • MEI has traded 80,673 shares today.
  • MEI is trading at 5.97 times the normal volume for the stock at this time of day.
  • MEI is trading at a new low 5.03% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on MEI:

Methode Electronics, Inc. designs, manufactures, and markets components and subsystem devices worldwide. Its Automotive segment supplies electronic and electromechanical devices, and related products to automobile original equipment manufacturers. The stock currently has a dividend yield of 0.9%. MEI has a PE ratio of 15.1. Currently there are 4 analysts that rate Methode Electronics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Methode Electronics has been 370,700 shares per day over the past 30 days. Methode has a market cap of $1.6 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.64 and a short float of 2.8% with 1.62 days to cover. Shares are up 20.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Methode Electronics as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • MEI's very impressive revenue growth greatly exceeded the industry average of 3.6%. Since the same quarter one year prior, revenues leaped by 51.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MEI's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MEI has a quick ratio of 2.43, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, METHODE ELECTRONICS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 362.96% and other important driving factors, this stock has surged by 53.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MEI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 373.2% when compared to the same quarter one year prior, rising from $10.16 million to $48.09 million.

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