Methode Electronics (NYSE: MEI) and AVX Corporation (NYSE:AVX) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitabiliy, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Dividends

Methode Electronics pays an annual dividend of $0.36 per share and has a dividend yield of 0.8%. AVX Corporation pays an annual dividend of $0.44 per share and has a dividend yield of 2.7%. Methode Electronics pays out 14.6% of its earnings in the form of a dividend. AVX Corporation pays out 59.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AVX Corporation has increased its dividend for 4 consecutive years. AVX Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Methode Electronics has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, AVX Corporation has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Valuation and Earnings

This table compares Methode Electronics and AVX Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Methode Electronics $809.50 million 1.94 $138.80 million $2.46 17.34
AVX Corporation $1.31 billion 2.11 $241.14 million $0.74 22.27

AVX Corporation has higher revenue and earnings than Methode Electronics. Methode Electronics is trading at a lower price-to-earnings ratio than AVX Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations for Methode Electronics and AVX Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Methode Electronics 0 1 3 0 2.75
AVX Corporation 0 2 0 0 2.00

Methode Electronics currently has a consensus target price of $46.75, suggesting a potential upside of 9.61%. AVX Corporation has a consensus target price of $16.25, suggesting a potential downside of 1.40%. Given Methode Electronics’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Methode Electronics is more favorable than AVX Corporation.

Profitability

This table compares Methode Electronics and AVX Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Methode Electronics 11.41% 18.89% 13.97%
AVX Corporation 9.45% 5.77% 5.18%

Insider & Institutional Ownership

89.5% of Methode Electronics shares are owned by institutional investors. Comparatively, 24.7% of AVX Corporation shares are owned by institutional investors. 5.8% of Methode Electronics shares are owned by company insiders. Comparatively, 0.6% of AVX Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Methode Electronics beats AVX Corporation on 11 of the 17 factors compared between the two stocks.

Methode Electronics Company Profile

Methode Electronics, Inc. (Methode) is a manufacturer of component and subsystem devices. The Company designs, manufactures and markets devices employing electrical, radio remote control, electronic, wireless and sensing technologies. The Company operates through segments, including Automotive, Interface, Power Products and Other. The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile original equipment manufacturers (OEMs). The Interface segment provides a range of copper and fiber-optic interface and interface solutions. The Power Products segment manufactures braided flexible cables, current-carrying laminated bus devices, custom power-product assemblies, such as PowerRail solution, high-current low voltage flexible power cabling systems and powder coated bus bars. The Other segment includes medical devices, inverters and battery systems, and insulated gate bipolar transistor solutions.

AVX Corporation Company Profile

AVX Corporation (AVX) is a manufacturer and supplier and reseller of a line of passive electronic components, interconnect devices and related products. AVX operates in three segments: Passive Components, Kyocera Electronic Devices (KED Resale) and Interconnect. The Passive Components segment consists of surface mount and leaded ceramic capacitors, surface mount and leaded tantalum capacitors, surface mount and leaded film capacitors, thick and thin film packages of multiple passive integrated components, thermistors, inductors and resistive products. The KED Resale segment consists of ceramic capacitors, frequency control devices, surface acoustic wave (SAW) devices, sensor products, radio frequency (RF) modules, actuators, acoustic devices and connectors produced by Kyocera and resold by AVX. The Interconnect segment consists primarily of AVX Interconnect automotive, telecom and memory connectors manufactured by AVX Interconnect or purchased from other manufacturers for resale.

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