In this article, I will take a look at Matthews International Corporation’s (NASDAQ:MATW) most recent earnings update (30 September 2018) and compare these latest figures against its performance over the past few years, along with how the rest of MATW’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
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Did MATW’s recent earnings growth beat the long-term trend and the industry?
MATW’s trailing twelve-month earnings (from 30 September 2018) of US$107m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 17%, indicating the rate at which MATW is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is merely owing to an industry uplift, or if Matthews International has seen some company-specific growth.
In terms of returns from investment, Matthews International has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 6.0% is below the US Commercial Services industry of 7.5%, indicating Matthews International’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Matthews International’s debt level, has increased over the past 3 years from 5.6% to 6.6%.
What does this mean?
Though Matthews International’s past data is helpful, it is only one aspect of my investment thesis. While Matthews International has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Matthews International to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MATW’s future growth? Take a look at our free research report of analyst consensus for MATW’s outlook.
- Financial Health: Are MATW’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.