Updated 3/11/25
Matthews International Corporation (NASDAQ: MATW) has been around for over a century, making it a company with deep roots. It operates in three major segments—Memorialization, Industrial Technologies, and SGK Brand Solutions. While its business is diversified, the memorialization segment, which includes caskets, plaques, and cemetery products, is a steady source of cash flow.
However, recent financial troubles have put pressure on the stock. Revenue has declined, net income is negative, and debt levels are concerning. For dividend investors, this raises an important question: Can Matthews keep up its dividend payments, or is a cut on the horizon? Let’s break it down.
Key Dividend Metrics
📈 Forward Dividend Yield: 4.22%
💰 Annual Dividend Rate: $1.00
📊 Payout Ratio: 113.10% (Above safe levels)
📉 Five-Year Average Dividend Yield: 2.98%
📅 Next Dividend Payment Date: February 24, 2025
🔻 Ex-Dividend Date: February 10, 2025
Dividend Overview
Matthews International currently pays a dividend yield of 4.22%, which is much higher than its five-year average of 2.98%. While this might look like a great income play, the payout ratio tells a different story. At 113.10%, the company is paying out more than it earns. That’s a major red flag.
A payout ratio above 100% means Matthews is either dipping into cash reserves or borrowing to maintain its dividend. That’s not a sustainable strategy. If earnings don’t recover soon, the company might be forced to cut the dividend to preserve cash.
That said, Matthews has been a reliable dividend payer for years. It’s not a company that cuts dividends lightly. But given the financial pressure it’s under, it’s something investors need to watch closely.
Dividend Growth and Safety
Matthews has been consistent with dividend payments, but growth potential looks limited unless earnings recover.
🔹 Dividend Safety: Questionable with the payout ratio above 100%
🔹 Dividend Growth: Unlikely in the near term given financial challenges
🔹 Dividend History: Strong past record, but risks ahead
The company has been able to sustain dividends in difficult times before, but this time might be different. With revenue declining and debt increasing, management may have to make some tough choices.
Chart Analysis
Price Action
The stock is currently trading at 23.62, closing slightly lower than the opening price of 23.66. The daily high reached 23.89, while the low dipped to 23.29. The price has been in a downward trend, with some short-lived rallies, but overall, the bearish momentum seems to be intact.
The longer-term 200-day moving average (blue line) has been trending downward for most of the past year, reinforcing the broader bearish sentiment. Meanwhile, the 50-day moving average (orange line) attempted to recover earlier in the year but has since turned downward again, indicating a loss of momentum after a short-term rally.
Moving Averages
The 50-day moving average had been rising in late 2024 and briefly crossed above the 200-day moving average, forming a golden cross, which is typically a bullish signal. However, the price failed to hold above key resistance levels, and the 50-day moving average is now rolling over, dipping below the 200-day moving average again. This is often a bearish signal, known as a death cross, and suggests continued downside pressure.
Volume Trends
Volume remains relatively low at 11,929, indicating a lack of strong conviction from buyers or sellers at the moment. Looking back, there were notable volume spikes in October and February, likely signaling moments of heightened investor interest, possibly due to earnings announcements or other fundamental catalysts. More recently, volume has tapered off, which suggests a period of indecision or consolidation.
Relative Strength Index (RSI)
The RSI has been hovering in a lower range for some time, reflecting weak momentum. It spiked up in December when the stock had a strong rally, but it has since settled into a more neutral zone, indicating neither extreme overbought nor oversold conditions. This suggests that while the stock isn’t necessarily in a deeply oversold condition, it also lacks strong buying interest.
Recent Price Action
Looking at the past five trading sessions, the price action has been relatively muted, with small daily price movements. There have been some long wicks on recent candlesticks, which indicate buying and selling pressure battling for control. A longer wick on the bottom suggests buyers stepped in at lower levels, while a longer wick on the top suggests sellers quickly took advantage of any rallies.
Support and Resistance Levels
The 23.00 to 23.50 range appears to be acting as short-term support, as the price has tested this zone multiple times without breaking below it decisively. However, if this level fails, there could be a move lower toward the 21.00 level, which was the previous 52-week low.
On the upside, the stock would need to reclaim 25.00 for any meaningful recovery to take shape. That level coincides with the 50-day moving average, which is now acting as resistance. A break above the 50-day moving average could provide some bullish momentum, but until then, the trend remains weak.
Analyst Ratings
Upgrades 📈
In July 2023, analysts revised their outlook on Matthews International Corporation (MATW), raising the price target from 50 to 64. This upgrade was largely driven by strong performance in the Memorialization and Industrial Technologies segments, which continued to generate steady revenue. Analysts expressed confidence in the company’s ability to maintain profitability in these divisions despite broader market uncertainty.
Downgrades 📉
In September 2024, the stock received a downward revision, with the price target adjusted from 54 to 40 while still maintaining a buy rating. The downgrade was linked to increased business variability and concerns about upcoming debt maturities. Analysts pointed to the need for the company to address financial risks and improve cash flow stability to sustain its long-term market position.
Consensus Price Target 🎯
The latest consensus among analysts places MATW’s price target at approximately 41. This reflects a mixed outlook, balancing the company’s solid operational segments against financial challenges and debt-related risks.
These differing perspectives highlight the importance of monitoring Matthews International’s financial decisions and strategic plans, as they will play a key role in shaping future analyst sentiment and stock performance.
Earning Report Summary
Matthews International wrapped up the first quarter of fiscal year 2025 with mixed results. The company reported a net loss of $3.5 million, or $0.11 per share, which was slightly worse than the $2.3 million loss, or $0.07 per share, from the same period last year. While the loss widened, the numbers weren’t entirely unexpected given some of the recent headwinds in its business segments.
Revenue for the quarter came in at $401.8 million, marking a decline from the $450.0 million reported a year ago. The dip was largely due to lower sales in both the Industrial Technologies and Memorialization segments. Despite the decline in revenue, gross profit margins actually improved slightly, coming in at 31.3% compared to 29.4% last year. That suggests the company has been able to manage costs more efficiently, even as overall sales softened.
Operating expenses landed at $111.4 million, which was down slightly from $113.1 million last year. Management’s cost-cutting efforts seem to be paying off, helping to offset some of the pressure from higher labor costs. However, adjusted EBITDA dropped to $40.0 million from $45.5 million, reflecting ongoing challenges in the Industrial Technologies segment.
One area of concern is rising interest expenses, which climbed to $15.7 million from $11.6 million a year ago. With interest rates still relatively high, this added cost is something to keep an eye on, especially given the company’s debt load.
On the bright side, the Memorialization and SGK Brand Solutions segments held up relatively well, providing some stability. Despite the rough start to the fiscal year, management remains optimistic about the months ahead, expecting a rebound in the Industrial Technologies segment as the year progresses. The company isn’t changing its full-year outlook just yet, which suggests they believe the worst may be behind them.
Financial Health and Stability
🔸 Total Debt: $873.74M
🔸 Debt-to-Equity Ratio: 211.33% (Very high)
🔸 Total Cash: $33.97M
🔸 Current Ratio: 1.58 (Decent liquidity)
🔸 Operating Cash Flow (TTM): $81.54M
🔸 Levered Free Cash Flow (TTM): $174.23M
Matthews is carrying a significant debt load, with a debt-to-equity ratio of 211.33%. That’s well above what would be considered healthy. A company this leveraged has less flexibility when it comes to maintaining dividends, making strategic investments, or weathering economic downturns.
On the positive side, Matthews is still generating solid free cash flow, which gives it some breathing room. But without earnings improvement, debt reduction will be difficult, and dividend sustainability will remain a question mark.
Valuation and Stock Performance
🔹 Stock Price: $23.11
🔹 52-Week Range: $21.09 – $32.24
🔹 Trailing P/E Ratio: 28.90
🔹 Price-to-Sales Ratio: 0.42
🔹 Enterprise Value/EBITDA: 20.72
Matthews’ stock has struggled, trading near its 52-week low after declining 19.45% over the past year. Investors have been wary due to the company’s financial struggles, and unless there’s a turnaround in earnings or a clear debt reduction plan, it may be tough for the stock to gain momentum.
The valuation metrics present a mixed picture. While the price-to-sales ratio suggests the stock is reasonably priced relative to revenue, the high P/E ratio raises concerns. This is a company that isn’t generating enough profit to justify its current price, making it riskier for investors looking for stability.
Risks and Considerations
📉 Declining Revenue: A year-over-year drop of 10.70% in revenue raises concerns about long-term growth.
💸 Unsustainable Dividend Payout: With a payout ratio over 100%, Matthews is at risk of a dividend cut if earnings don’t recover.
🏦 High Debt Load: A debt-to-equity ratio of 211.33% means the company is highly leveraged, limiting financial flexibility.
⚠️ Profitability Issues: Negative net income (-$60.83M) and weak margins signal deeper operational problems.
🔄 Potential Dividend Cut: If financial trends don’t improve, management may have no choice but to reduce the dividend.
Final Thoughts
Matthews International has a long track record of paying dividends, but the current numbers don’t paint a reassuring picture. A high payout ratio, declining revenue, and heavy debt create a challenging situation.
For income investors, the 4.22% yield may seem appealing, but it comes with significant risks. Unless Matthews can turn around its profitability and reduce its leverage, the dividend may not be sustainable in the long run. Investors should keep a close eye on upcoming earnings reports and any announcements related to debt management.
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