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Is Methode (MEI) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Methode (MEI). MEI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MEI has a P/S ratio of 0.96. This compares to its industry's average P/S of 1.26.

Finally, investors will want to recognize that MEI has a P/CF ratio of 6.22. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 20.19. Over the past year, MEI's P/CF has been as high as 9.99 and as low as 5.27, with a median of 7.92.

Value investors will likely look at more than just these metrics, but the above data helps show that Methode is likely undervalued currently. And when considering the strength of its earnings outlook, MEI sticks out at as one of the market's strongest value stocks.


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