FBR Capital reiterated an Outperform rating and $42.00 price target on Methode Electronics (NYSE: MEI) following announcements around new business and capital deployment, as well as the company's 1Q16 earnings release. Management yesterday announced a $100M share buyback program to be completed by end of FY17, as well as a follow-on award to an existing program with a major North American OEM customer. EPS came at $0.60, beating consensus of $0.54.

Analyst Christopher Horn commented, "Methode Electronics (MEI) shares saw quite a reversal of sentiment yesterday as the company made significant announcements around new business and capital deployment and delivered a sound beat to EPS expectations. The company capitalized on lower raw materials and more efficient production facilities to expand automotive segment gross margin by a full 6.1%. As a reminder, automotive accounts for about three-quarters of the company's aggregate sales, meaning this margin growth provided a major tailwind to overall EPS. We think there are two key announcements that investors should focus on: (1) the company announced a follow-on award to an existing program with a major North American OEM customer, which we believe represents the next-gen GM truck center console, a huge win for the company; and (2) management yesterday announced a $100M share buyback program to be completed by end of FY17, which we estimate will be on average $0.25 accretive to EPS over the next two years. With these significant announcements in mind, and considering the company's overall bottomline performance this quarter, we remain confident in Methode's ability to generate shareholder value over the long term. We reiterate our Outperform rating and our $42 price target."

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Shares of Methode Electronics closed at $32.82 yesterday.