Critical Contrast: Methode Electronics (MEI) vs. Transcat (TRNS)

Methode Electronics (NYSE: MEI) and Transcat (NASDAQ:TRNS) are both small-cap industrials companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
Methode Electronics 10.81% 17.07% 12.55%
Transcat 3.24% 10.03% 4.94%

Volatility and Risk

Methode Electronics has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500. Comparatively, Transcat has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500.

Valuation & Earnings

This table compares Methode Electronics and Transcat’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Methode Electronics $816.50 million 1.80 $92.90 million $2.44 15.76
Transcat $143.90 million 0.78 $4.52 million $0.68 23.13

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

Dividends

Methode Electronics pays an annual dividend of $0.44 per share and has a dividend yield of 1.1%. Transcat does not pay a dividend. Methode Electronics pays out 18.0% of its earnings in the form of a dividend.

Insider and Institutional Ownership

87.2% of Methode Electronics shares are owned by institutional investors. Comparatively, 57.1% of Transcat shares are owned by institutional investors. 4.4% of Methode Electronics shares are owned by company insiders. Comparatively, 8.8% of Transcat shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Methode Electronics and Transcat, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Methode Electronics 0 0 3 0 3.00
Transcat 0 0 3 0 3.00

Methode Electronics presently has a consensus price target of $48.00, indicating a potential upside of 24.84%. Transcat has a consensus price target of $20.00, indicating a potential upside of 27.15%. Given Transcat’s higher probable upside, analysts plainly believe Transcat is more favorable than Methode Electronics.

Summary

Methode Electronics beats Transcat on 10 of the 14 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.

Transcat Company Profile

Transcat, Inc. is a provider of calibration and laboratory instrument services and a distributor of professional grade test, measurement and control instrumentation. The Company conducts its business through two segments: service (Service) and distribution (Distribution). Through the Service segment, the Company offers calibration, repair, inspection, analytical qualifications, preventative maintenance and other related services, a majority of which are processed through its asset management system, CalTrak (CalTrak). Through its Distribution segment, the Company markets, sells and rents national brand instruments to customers around the globe. The Company is focused on providing its services and products to the life science industries, which include pharmaceutical, biotechnology, medical device manufacturing and other Food and Drug Administration (FDA)-regulated businesses.

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