Methode Electronics (MEI) reported Q3 earnings this morning and missed revenue expectations of $209.7 million, posting a $206 million top line number but posted a very strong earnings per share (EPS) beat of .68 cents per share vs. consensus estimates of .49 cents per share.
But the story here for investors lies in the margin expansion. When Methode reported a top and bottom line beat in Q2, shares sold off. This happened because analysts reported their belief that margin expansion was slowing – Methode reported margin expansion in Q2 from 21.7% to 26.2% – a 20.7% improvement quarter over quarter.
In Methode’s Q3 report this morning, margins increased from 20.3% to 27.3%, a 34% improvement quarter over quarter. This jump in margin expansion combined with a solid EPS beat could be enough to slay the bear this morning. Methode will be holding an investor confence call today at 9 AM. You can hear the call live here.
Disclosure: I am long MEI