Methode Electronics (NYSE:MEI) and Quantum (NASDAQ:QMCO) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, risk, earnings, dividends and analyst recommendations.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for Methode Electronics and Quantum, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Methode Electronics | 0 | 1 | 0 | 0 | 2.00 |
| Quantum | 0 | 0 | 3 | 0 | 3.00 |
Methode Electronics currently has a consensus price target of $34.00, suggesting a potential downside of 27.24%. Quantum has a consensus price target of $11.50, suggesting a potential upside of 31.88%. Given Quantum's stronger consensus rating and higher probable upside, analysts clearly believe Quantum is more favorable than Methode Electronics.
Profitability
This table compares Methode Electronics and Quantum's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Methode Electronics | 13.22% | 16.19% | 9.38% |
| Quantum | -4.11% | N/A | -8.61% |
Institutional and Insider Ownership
88.8% of Methode Electronics shares are held by institutional investors. Comparatively, 74.9% of Quantum shares are held by institutional investors. 3.2% of Methode Electronics shares are held by company insiders. Comparatively, 18.6% of Quantum shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Methode Electronics and Quantum's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Methode Electronics | $1.02 billion | 1.75 | $123.40 million | $3.12 | 14.98 |
| Quantum | $402.95 million | 1.18 | $-5,210,000.00 | ($0.14) | -62.29 |
Methode Electronics has higher revenue and earnings than Quantum. Quantum is trading at a lower price-to-earnings ratio than Methode Electronics, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Methode Electronics has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500. Comparatively, Quantum has a beta of 2.55, suggesting that its stock price is 155% more volatile than the S&P 500.
Summary
Methode Electronics beats Quantum on 9 of the 14 factors compared between the two stocks.
