Methode Electronics (NYSE:MEI) vs. Climb Global Solutions (NASDAQ:CLMB) Critical Analysis

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

Institutional & Insider Ownership

49.7% of Climb Global Solutions shares are held by institutional investors. Comparatively, 95.5% of Methode Electronics shares are held by institutional investors. 3.8% of Climb Global Solutions shares are held by insiders. Comparatively, 1.9% of Methode Electronics shares are held by 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.

Risk & Volatility

Climb Global Solutions has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, Methode Electronics has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Climb Global Solutions and Methode Electronics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Climb Global Solutions	0	2	2	1	2.80
Methode Electronics	1	3	2	0	2.17

Climb Global Solutions currently has a consensus price target of $31.00, indicating a potential downside of 5.49%. Methode Electronics has a consensus price target of $22.00, indicating a potential upside of 39.42%. Given Methode Electronics’ higher possible upside, analysts plainly believe Methode Electronics is more favorable than Climb Global Solutions.

Profitability

This table compares Climb Global Solutions and Methode Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Climb Global Solutions	2.88%	18.87%	5.04%
Methode Electronics	-3.52%	-5.63%	-2.94%

Valuation and Earnings

This table compares Climb Global Solutions and Methode Electronics”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Climb Global Solutions	$652.52 million	0.94	$21.33 million	$1.12	29.29
Methode Electronics	$1.02 billion	0.55	-$35.70 million	($1.04)	-15.17

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

Summary

Climb Global Solutions beats Methode Electronics on 10 of the 14 factors compared between the two stocks.

About Climb Global Solutions

Climb Global Solutions Inc. operates as a value-added information technology (IT) distribution and solutions company in the United States, Canada, Europe, the United Kingdom, and internationally. It operates in two segments, Distribution and Solutions. The company distributes technical software to corporate and value-added resellers, consultants, and systems integrators under the name Climb Channel Solutions; and provides cloud solutions and resells software, hardware, and services under the name Grey Matter. It also resells computer software and hardware developed by others, as well as provides technical services to end user customers. In addition, the company offers a line of products from various software vendors; and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management, and other technically sophisticated domains, as well as computer hardware. It markets its products through its own web sites, local and on-line seminars, events, webinars, and social media, as well as direct email and printed materials. The company was formerly known as Wayside Technology Group, Inc. and changed its name to Climb Global Solutions Inc. in October 2022. Climb Global Solutions Inc. was incorporated in 1982 and is headquartered in Eatontown, New Jersey.

About Methode Electronics

Methode Electronics, Inc. designs, engineers, and produces mechatronic products worldwide. It operates through four segments: Automotive, Industrial, Interface, and Medical. The Automotive segment supplies 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 and ergonomic switches, transmission lead-frames, complex insert molded solutions, LED-based lighting solutions, and sensors, which incorporate magneto-elastic sensing, eddy current, or other sensing technologies that monitor the operation or status of a component or system. The Industrial segment manufactures external lighting solutions comprising driving, work, and signal lights; industrial safety radio remote controls; braided flexible cables; current-carrying laminated and powder-coated busbars; high-voltage high current connector and contracts; custom power-product assemblies, such as PowerRail solution; and high-current low-voltage flexible power cabling systems that are used in aerospace, cloud computing, commercial vehicles, construction equipment, industrial, military, power conversion, and transportation markets and applications. The Interface segment provides various copper-based transceivers and related accessories for the cloud computing hardware equipment and telecommunications broadband equipment markets; user interface solutions for the appliance, commercial food service, and point-of-sale equipment markets; and fluid-level sensors for the marine/recreational vehicle and sump pump markets. The Medical segment offers Dabir Surfaces, a surface support technology aimed at pressure injury prevention for use by patients who are immobilized or otherwise at risk for pressure injuries, including patients undergoing long-duration surgical procedures. Methode Electronics, Inc. was incorporated in 1946 and is headquartered in Chicago, Illinois.