MEI
Methode Electronics, Inc.
$11.24
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 67.0% below fair value
You pay
$11.24
Bear
$27.28
Fair
$34.10
Bull
$40.92
Bear
$27.28
+142.7%
$2.70 × 12x P/E
Fair
$34.10
+203.4%
$2.70 × 15x P/E
Bull
$40.92
+264.1%
$2.70 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
4.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $8.50 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $34.10 per share.
Warnings
Wall Street's average price target is $8.50 (from 6 analysts). Our estimate is 376% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples