Matthews International (MATW:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Matthews International(MATW:NAS)

Consumer Cyclical:Personal Services

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Close Price/Date
$42.82 (USD) 21/11/2018

Weighted Valuation
$55.00 (USD)

Overall Rating
Undervalued by 28.4%

Valuation Models Analyst Consensus: $55.00 (USD)
(in order of importance)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (MATW:NAS USD)

Price 42.82
Range 41.20 – 43.49
52 week 40.23 – 60.85
Open 41.20
Vol / Avg. 272990/164510
Mkt cap 1.37B
P/E 12.71
Div/yield 0.76/0.02
EPS 3.37
Shares 32.07M
Beta 1.19

Company Description

Matthews International Corp is a personal services company that primarily provides brand solution services, memorialization products, and industrial products in the United States and Europe. The majority of Matthews’ revenue is derived from its SGK Brand Solutions business, which provides brand development services, printing equipment, creative design services, and embossing tools to the consumer packaged goods and packaging industries. The company’s Memorialization segment, which sells bronze and granite memorials, caskets, and cremation equipment to the cemetery and funeral home industries, also contributes a significant amount. Most of Matthews’ revenue is generated from sales made in the U.S., while European customers also contribute a sizable percentage.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for MATW:NAS

Using a discounted cash flow model we generated an intrinsic value of $136.26 (USD) for MATW:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

MATW:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $136.26 1% 5% 1% 5%
WACC (or Ke) 7.14 $177.33 $108.79
Terminal Growth Rate 2.10 $111.29 $173.59
Tax Rate 0.09 $145.45 $127.07
Cash Flow 318,329,369 $127.92 $144.60
Capital Expenditures 0 $136.26 $136.26
Long Term Debt 919,423,000 $137.69 $134.83

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $61.77 (USD) for MATW:NAS. We also generated a valuation of $64.87 (USD) using other metrics and comparables.
The comparable companies were Shutterfly (SFLY:NAS) and Weight Watchers Intl (WTW:NAS).

Company MATW:NAS End Date Value
Earnings/Share $3.37 (USD)
Book Value/Share $25.96 (USD)
Sales/Share $49.74 (USD)
Cash Flow/Share $4.26 (USD)
EBITDA/Share $6.67 (USD)
Price Based on Comps Adjustment Factor (%)
$127.05 (USD) -31.8
$79.98 (USD) -41.2
$107.94 (USD) -36.5
$25.50 (USD) -28.1
$97.53 (USD) -1.0
MATW:NAS Ratios Used Average Values SFLY:NAS WTW:NAS
13.69 PE Ratio 37.70 54.35 21.05
1.60 PB Ratio 3.08 3.08 0.00
0.84 PS Ratio 2.17 1.18 3.16
9.77 PCF Ratio 13.06 10.41 15.70
12.08 EV to EBITDA 14.63 12.82 16.44


Using a multiples approach we generated a valuation of  $76.28 (USD) for MATW:NAS

Company MATW:NAS End Date Value
Earnings/Share $3.37 (USD)
Book Value/Share $25.96 (USD)
Sales/Share $49.74 (USD)
Cash Flow/Share $4.26 (USD)
EBITDA/Share $6.67 (USD)
Price Based on Comps Adjustment Factor
$98.44 (USD) 0
$62.15 (USD) 0
$62.01 (USD) 0
$57.23 (USD) 0
$101.56 (USD) 0
Ratios Ratio Average
PE Ratio 29.21
PB Ratio 2.39
PS Ratio 1.25
PCF Ratio 13.43
EV to EBITDA 15.23

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  MATW:NAS for the last 10 years was  2.36

We ran the Adjusted Book Value for  MATW:NAS and generated a book value of  $27.07 (USD)
By multiplying these we get an adjusted valuation of  $64.01 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for MATW:NAS. The 1 analysts have a concensus valuation for MATW:NAS for 2019 of $55.00 (USD).

MATW:NAS Matthews International

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 0 0 2018-11-20

Current Price: 42.82 USD

Analyst Consensus
USD Millions 2019
Mean EPS 4.14
# EPS Analysts 1
Mean Revenue 1,696.00
# Revenue Analysts 1
Mean Target Price 55.00
Mean Cash Flow
Mean EBITDA 272.00
Mean Net Income 129.50
Mean Debt Outstanding
Mean Tax Rate 26.00
Mean Growth Rate 9.00
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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