Custom-engineered solutions manufacturer Methode Electronics (NYSE: MEI) beat Wall Street’s revenue expectations in Q1 CY2026, with sales up 15.9% year on year to $298.1 million. The company’s full-year revenue guidance of $1.05 billion at the midpoint came in 10.3% above analysts’ estimates. Its non-GAAP loss of $0.30 per share was 42.9% below analysts’ consensus estimates.

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“Fiscal 2026 marked a year of meaningful progress in Methode’s transformation as we continued to execute on the commitments we made to our employees, customers, and shareholders,” said Jon DeGaynor, President and Chief Executive Officer.

Company Overview

Founded in 1946, Methode Electronics (NYSE: MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Methode Electronics’s demand was weak and its revenue declined by 1.3% per year. This wasn’t a great result and is a sign of poor business quality.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Methode Electronics’s recent performance shows its demand remained suppressed as its revenue has declined by 4.4% annually over the last two years.

This quarter, Methode Electronics reported year-on-year revenue growth of 15.9%, and its $298.1 million of revenue exceeded Wall Street’s estimates by 25%.

Looking ahead, sell-side analysts expect revenue to decline by 7.1% over the next 12 months, a slight deceleration versus the last two years. This projection doesn’t excite us and suggests its products and services will face some demand challenges.

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Operating Margin

Methode Electronics was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Methode Electronics’s operating margin decreased by 9 percentage points over the last five years. Methode Electronics’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Methode Electronics generated an operating margin profit margin of 3.7%, up 12.1 percentage points year on year. The increase was driven by stronger leverage on its cost of sales (not higher efficiency with its operating expenses), as indicated by its larger rise in gross margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Methode Electronics, its EPS declined by 18.6% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

We can take a deeper look into Methode Electronics’s earnings to better understand the drivers of its performance. As we mentioned earlier, Methode Electronics’s operating margin expanded this quarter but declined by 9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Methode Electronics, its two-year annual EPS declines of 56.7% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q1, Methode Electronics reported adjusted EPS of negative $0.30, up from negative $0.77 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Methode Electronics’s full-year EPS will flip from negative $1.08 to positive $0.33.

Key Takeaways from Methode Electronics’s Q1 Results

We were impressed by how significantly Methode Electronics blew past analysts’ EBITDA expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, we think this was still a decent quarter with some key metrics above expectations. The stock traded up 6.6% to $14.94 immediately following the results.

Sure, Methode Electronics had a solid quarter, but if we look at the bigger picture, is this stock a buy? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).