Intrinsic value of Matthews International Cl A - MATW

Previous Close

$52.98

  Intrinsic Value

$41.97

stock screener

  Rating & Target

sell

-21%

Previous close

$52.98

 
Intrinsic value

$41.97

 
Up/down potential

-21%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MATW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.43
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  1,516
  1,592
  1,671
  1,755
  1,843
  1,935
  2,032
  2,133
  2,240
  2,352
  2,469
  2,593
  2,723
  2,859
  3,002
  3,152
  3,309
  3,475
  3,648
  3,831
  4,022
  4,224
  4,435
  4,656
  4,889
  5,134
  5,390
  5,660
  5,943
  6,240
  6,552
Variable operating expenses, $m
 
  1,460
  1,528
  1,600
  1,676
  1,755
  1,839
  1,926
  2,018
  2,114
  2,215
  2,232
  2,343
  2,461
  2,584
  2,713
  2,848
  2,991
  3,140
  3,297
  3,462
  3,635
  3,817
  4,008
  4,208
  4,419
  4,640
  4,872
  5,115
  5,371
  5,640
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,403
  1,460
  1,528
  1,600
  1,676
  1,755
  1,839
  1,926
  2,018
  2,114
  2,215
  2,232
  2,343
  2,461
  2,584
  2,713
  2,848
  2,991
  3,140
  3,297
  3,462
  3,635
  3,817
  4,008
  4,208
  4,419
  4,640
  4,872
  5,115
  5,371
  5,640
Operating income, $m
  113
  132
  143
  155
  167
  180
  193
  207
  222
  238
  254
  361
  379
  398
  418
  439
  461
  484
  508
  533
  560
  588
  617
  648
  681
  715
  751
  788
  827
  869
  912
EBITDA, $m
  181
  252
  264
  278
  291
  306
  321
  337
  354
  372
  391
  410
  431
  452
  475
  498
  523
  550
  577
  606
  636
  668
  701
  736
  773
  812
  853
  895
  940
  987
  1,036
Interest expense (income), $m
  26
  31
  33
  36
  39
  42
  45
  48
  51
  55
  58
  62
  66
  71
  75
  80
  85
  90
  95
  101
  107
  113
  120
  127
  134
  142
  150
  158
  167
  177
  186
Earnings before tax, $m
  96
  101
  110
  119
  128
  138
  148
  159
  171
  183
  196
  299
  313
  327
  343
  359
  376
  394
  413
  432
  453
  475
  497
  521
  546
  573
  601
  630
  660
  692
  726
Tax expense, $m
  22
  27
  30
  32
  35
  37
  40
  43
  46
  49
  53
  81
  84
  88
  93
  97
  102
  106
  111
  117
  122
  128
  134
  141
  148
  155
  162
  170
  178
  187
  196
Net income, $m
  74
  74
  80
  87
  93
  101
  108
  116
  125
  134
  143
  218
  228
  239
  250
  262
  274
  288
  301
  316
  331
  346
  363
  381
  399
  418
  438
  460
  482
  505
  530

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  58
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,245
  2,297
  2,412
  2,532
  2,659
  2,792
  2,932
  3,078
  3,232
  3,394
  3,563
  3,742
  3,929
  4,125
  4,331
  4,548
  4,775
  5,014
  5,265
  5,528
  5,804
  6,095
  6,399
  6,719
  7,055
  7,408
  7,778
  8,167
  8,576
  9,004
  9,455
Adjusted assets (=assets-cash), $m
  2,187
  2,297
  2,412
  2,532
  2,659
  2,792
  2,932
  3,078
  3,232
  3,394
  3,563
  3,742
  3,929
  4,125
  4,331
  4,548
  4,775
  5,014
  5,265
  5,528
  5,804
  6,095
  6,399
  6,719
  7,055
  7,408
  7,778
  8,167
  8,576
  9,004
  9,455
Revenue / Adjusted assets
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
Average production assets, $m
  637
  669
  702
  737
  774
  813
  853
  896
  941
  988
  1,037
  1,089
  1,143
  1,201
  1,261
  1,324
  1,390
  1,459
  1,532
  1,609
  1,689
  1,774
  1,863
  1,956
  2,053
  2,156
  2,264
  2,377
  2,496
  2,621
  2,752
Working capital, $m
  310
  296
  311
  326
  343
  360
  378
  397
  417
  437
  459
  482
  506
  532
  558
  586
  616
  646
  679
  713
  748
  786
  825
  866
  909
  955
  1,003
  1,053
  1,105
  1,161
  1,219
Total debt, $m
  911
  954
  1,029
  1,107
  1,190
  1,276
  1,367
  1,463
  1,563
  1,669
  1,779
  1,895
  2,017
  2,146
  2,280
  2,421
  2,569
  2,725
  2,889
  3,060
  3,240
  3,430
  3,628
  3,837
  4,056
  4,286
  4,527
  4,781
  5,047
  5,327
  5,620
Total liabilities, $m
  1,455
  1,498
  1,573
  1,651
  1,734
  1,820
  1,911
  2,007
  2,107
  2,213
  2,323
  2,439
  2,561
  2,690
  2,824
  2,965
  3,113
  3,269
  3,433
  3,604
  3,784
  3,974
  4,172
  4,381
  4,600
  4,830
  5,071
  5,325
  5,591
  5,871
  6,164
Total equity, $m
  790
  799
  839
  881
  925
  972
  1,020
  1,071
  1,125
  1,181
  1,240
  1,302
  1,367
  1,436
  1,507
  1,583
  1,662
  1,745
  1,832
  1,924
  2,020
  2,121
  2,227
  2,338
  2,455
  2,578
  2,707
  2,842
  2,984
  3,134
  3,290
Total liabilities and equity, $m
  2,245
  2,297
  2,412
  2,532
  2,659
  2,792
  2,931
  3,078
  3,232
  3,394
  3,563
  3,741
  3,928
  4,126
  4,331
  4,548
  4,775
  5,014
  5,265
  5,528
  5,804
  6,095
  6,399
  6,719
  7,055
  7,408
  7,778
  8,167
  8,575
  9,005
  9,454
Debt-to-equity ratio
  1.153
  1.190
  1.230
  1.260
  1.290
  1.310
  1.340
  1.370
  1.390
  1.410
  1.430
  1.460
  1.480
  1.490
  1.510
  1.530
  1.550
  1.560
  1.580
  1.590
  1.600
  1.620
  1.630
  1.640
  1.650
  1.660
  1.670
  1.680
  1.690
  1.700
  1.710
Adjusted equity ratio
  0.335
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  74
  74
  80
  87
  93
  101
  108
  116
  125
  134
  143
  218
  228
  239
  250
  262
  274
  288
  301
  316
  331
  346
  363
  381
  399
  418
  438
  460
  482
  505
  530
Depreciation, amort., depletion, $m
  68
  120
  121
  123
  125
  126
  128
  130
  132
  134
  137
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
  84
  88
  92
  97
  102
  107
  112
  118
  124
Funds from operations, $m
  136
  194
  201
  210
  218
  227
  237
  246
  257
  268
  279
  267
  280
  293
  307
  322
  337
  353
  370
  388
  407
  426
  447
  469
  491
  515
  540
  567
  594
  623
  654
Change in working capital, $m
  -13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
Cash from operations, $m
  149
  180
  187
  194
  202
  210
  219
  228
  237
  247
  257
  244
  256
  268
  280
  294
  308
  322
  338
  354
  371
  389
  408
  427
  448
  470
  493
  517
  542
  568
  596
Maintenance CAPEX, $m
  0
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -118
New CAPEX, $m
  -45
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -77
  -80
  -84
  -89
  -93
  -98
  -103
  -108
  -113
  -119
  -125
  -131
Cash from investing activities, $m
  -142
  -61
  -63
  -67
  -70
  -74
  -78
  -81
  -85
  -89
  -93
  -99
  -103
  -109
  -114
  -120
  -126
  -132
  -139
  -146
  -152
  -160
  -169
  -177
  -186
  -195
  -205
  -215
  -226
  -237
  -249
Free cash flow, $m
  7
  119
  123
  127
  132
  136
  141
  146
  152
  158
  164
  146
  152
  159
  166
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  275
  288
  301
  316
  331
  347
Issuance/(repayment) of debt, $m
  29
  73
  75
  79
  83
  87
  91
  96
  100
  105
  111
  116
  122
  128
  134
  141
  148
  156
  163
  172
  180
  189
  199
  209
  219
  230
  241
  254
  266
  280
  294
Issuance/(repurchase) of shares, $m
  -14
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  15
  73
  75
  79
  83
  87
  91
  96
  100
  105
  111
  116
  122
  128
  134
  141
  148
  156
  163
  172
  180
  189
  199
  209
  219
  230
  241
  254
  266
  280
  294
Total cash flow (excl. dividends), $m
  24
  191
  198
  206
  214
  223
  232
  242
  252
  263
  274
  262
  274
  287
  301
  315
  330
  346
  363
  380
  398
  418
  438
  459
  481
  505
  529
  555
  582
  610
  640
Retained Cash Flow (-), $m
  -81
  -37
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -117
  -123
  -129
  -135
  -142
  -149
  -157
Prev. year cash balance distribution, $m
 
  28
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  182
  158
  164
  170
  177
  184
  191
  199
  207
  215
  200
  209
  219
  229
  240
  251
  263
  275
  288
  302
  317
  332
  348
  364
  382
  400
  420
  440
  461
  484
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  168
  134
  127
  119
  111
  102
  93
  84
  75
  66
  51
  44
  37
  31
  26
  21
  17
  13
  10
  7
  5
  4
  3
  2
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Matthews International Corporation is a provider of brand solutions, memorialization products and industrial technologies. The Company operates through three segments: SGK Brand Solutions, Memorialization and Industrial Technologies. The SGK Brand Solutions segment provides brand development, deployment and delivery (consisting of brand management, printing plates and cylinders, pre-media services and imaging services for consumer packaged goods and retail customers, merchandising display systems, and marketing and design services). The Memorialization segment manufactures and markets a line of memorialization products used primarily in cemeteries, funeral homes and crematories. The Industrial Technologies segment designs, manufactures and distributes a range of marking, coding and industrial automation solutions, order fulfillment systems and related consumables.

FINANCIAL RATIOS  of  Matthews International Cl A (MATW)

Valuation Ratios
P/E Ratio 23
Price to Sales 1.1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 11.4
Price to Free Cash Flow 16.4
Growth Rates
Sales Growth Rate 2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.1%
Cap. Spend. - 3 Yr. Gr. Rate 9.2%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 111.5%
Total Debt to Equity 115.3%
Interest Coverage 5
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 4.5%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 9.9%
Return On Equity - 3 Yr. Avg. 9.2%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 37.1%
Gross Margin - 3 Yr. Avg. 37.3%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. 12.4%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 6.4%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 4.6%
Effective Tax Rate 22.9%
Eff/ Tax Rate - 3 Yr. Avg. 27.8%
Payout Ratio 29.7%

MATW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MATW stock intrinsic value calculation we used $1516 million for the last fiscal year's total revenue generated by Matthews International Cl A. The default revenue input number comes from 2017 income statement of Matthews International Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MATW stock valuation model: a) initial revenue growth rate of 5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.1%, whose default value for MATW is calculated based on our internal credit rating of Matthews International Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Matthews International Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MATW stock the variable cost ratio is equal to 92%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MATW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Matthews International Cl A.

Corporate tax rate of 27% is the nominal tax rate for Matthews International Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MATW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MATW are equal to 42%.

Life of production assets of 22.2 years is the average useful life of capital assets used in Matthews International Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MATW is equal to 18.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $790 million for Matthews International Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 32.197 million for Matthews International Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Matthews International Cl A at the current share price and the inputted number of shares is $1.7 billion.

RELATED COMPANIES Price Int.Val. Rating
HI Hillenbrand 44.75 52.84  hold
SCI Service Intern 38.55 23.82  sell
CSV Carriage Servi 26.11 27.08  hold
STON StoneMor Partn 5.33 5.47  hold
SNFCA Security Natio 4.50 22.57  str.buy
JOE St. Joe 17.95 5.79  str.sell

COMPANY NEWS

▶ Matthews International posts 4Q profit   [Nov-16-17 04:59PM  Associated Press]
▶ Matthews International posts 3Q profit   [Jul-28-17 08:04PM  Associated Press]
▶ Matthews International Declares Quarterly Dividend   [Jul-20-17 02:00PM  GlobeNewswire]
▶ Husband of woman who stole nearly $13M faces fed tax charges   [May-03-17 12:52PM  Associated Press]
▶ Matthews International posts 2Q profit   [Apr-27-17 06:40PM  Associated Press]
▶ Matthews International Declares Quarterly Dividend   [Apr-20-17 02:00PM  GlobeNewswire]
▶ Cashier admits stealing $13M at Pittsburgh monuments firm   [Mar-16-17 11:11AM  Associated Press]
Financial statements of MATW
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.