Matthews International Misses Q4 Revenue Estimates: Time to Buy?
Key Metrics
- Revenue: $401.8 million (miss of $25.1 million or 5.9%)
- Adjusted EPS: $0.14 (miss of $0.09 or 37.8%)
- Adjusted EBITDA: $40 million (miss of $2.05 million or 4.9%)
Company Overview
Matthews International (MATW) is a diversified company offering ceremonial services, brand solutions, and industrial technologies. Its specialized consumer services and technological advancements differentiate the company.
Sales Growth
Over the past five years, Matthews' sales grew at a modest 2.7% annualized rate. While this underperforms compared to industry standards, the company has experienced flat revenue growth over the past two years, indicating a slowdown in demand.
Q4 Results
In Q4 CY2024, Matthews missed Wall Street's revenue estimates by 10.7%, reporting $401.8 million. The company's non-GAAP EPS also fell short of expectations by 37.8%. However, its full-year EBITDA guidance exceeded analyst estimates.
Cash Flow
Matthews has faced challenges in cash profitability. Its free cash flow margin averaged 3% over the past two years, limiting its ability to return capital to shareholders. However, in Q4, the company broke even from a free cash flow perspective, indicating improvement.
Investment Opportunity
Despite underperforming in Q4, Matthews' positive EBITDA guidance for the full year suggests potential for recovery. While investors should consider the company's revenue miss and EPS shortfall, they should also evaluate its long-term business quality and valuation before making investment decisions.
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