Contrasting IEH (IEHC) and Methode Electronics (MEI)

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IEH (OTCMKTS:IEHC) and Methode Electronics (NYSE:MEI) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitability, analyst recommendations, institutional ownership and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
IEH 16.35% 26.62% 22.88%
Methode Electronics 6.49% 18.93% 12.78%

Risk and Volatility

IEH has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Methode Electronics has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500.

Institutional & Insider Ownership

4.1% of IEH shares are held by institutional investors. Comparatively, 94.5% of Methode Electronics shares are held by institutional investors. 46.0% of IEH shares are held by insiders. Comparatively, 3.4% of Methode Electronics shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for IEH and Methode Electronics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IEH 0 0 0 0 N/A
Methode Electronics 0 1 1 0 2.50

Methode Electronics has a consensus price target of $50.00, suggesting a potential upside of 69.89%. Given Methode Electronics’ higher probable upside, analysts clearly believe Methode Electronics is more favorable than IEH.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IEH $23.47 million 1.28 $2.56 million N/A N/A
Methode Electronics $908.30 million 1.20 $57.20 million $3.00 9.81

Methode Electronics has higher revenue and earnings than IEH.

Dividends

Methode Electronics pays an annual dividend of $0.44 per share and has a dividend yield of 1.5%. IEH does not pay a dividend. Methode Electronics pays out 14.7% of its earnings in the form of a dividend.

Summary

Methode Electronics beats IEH on 8 of the 14 factors compared between the two stocks.

IEH Company Profile

IEH Corporation designs, develops, and manufactures printed circuit board connectors and custom interconnects for high performance applications. Its products include are used as basic components of larger assemblies of finished goods. The company markets its products directly to original equipment manufacturers, as well as through authorized representatives and distributors primarily to government, military, aerospace, medical, automotive, industrial, test equipment, and commercial electronic markets. It markets its products in the United States, Canada, Israel, India, various Pacific Rim countries, South Korea, and the European Union. The company was formerly known as Industrial Heat Treating Company, Inc. and changed its name to IEH Corporation in March 1989. IEH Corporation was founded in 1937 and is based in Brooklyn, New York.

Methode Electronics Company Profile

Methode Electronics, Inc. designs, manufactures, and markets component and subsystem devices worldwide. The company operates through four segments: Automotive, Interface, Power Products, and Other. The Automotive segment offers electronic and electro-mechanical devices, and related products to automobile original equipment manufacturers directly or through their tiered suppliers. Its products include integrated center consoles, hidden switches, ergonomic switches, transmission lead frames, and light-emitting diode based lighting sensors, which incorporate magneto-elastic sensing and other technologies that monitor the operation or status of a component or system. The Interface segment provides various copper and fiber-optic interface and interface solutions for the aerospace, appliance, commercial food service, construction, consumer, material handling, medical, military, mining, point-of-sale, and telecommunication markets. Its solutions consist of conductive polymers, industrial safety radio remote controls, optical and copper transceivers, and solid-state field-effect consumer touch panels; and services include the design and installation of fiber optic and copper infrastructure systems, and manufacturing active and passive optical components. The Power Products segment manufactures braided flexible cables, current-carrying laminated bus bars and devices, custom power-product assemblies, high-current low voltage flexible power cabling systems, and powder coated bus bars that are used in aerospace, computer, industrial and power conversion, military, telecommunication, and transportation markets and applications. The Other segment offers medical devices, inverters and battery systems, and insulated gate bipolar transistor solutions. Methode Electronics, Inc. was founded in 1946 and is headquartered in Chicago, Illinois.

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