2Q18 Beats; Holding Estimates
- 2Q18 (Mar) adjusted EPS was $0.93 (vs $0.84 last year), 2 cents above our estimate, aided by a lower tax rate and operating income up 9%;
- Due to 2Q18’s outperformance, our FY18 EPS estimate remains $4.01, up 10%, assuming continued benefits from acquisitions, productivity improvements and cost reductions, partially offset by still-sluggish, but potentially bottoming, conditions in SGK Brand Solutions in North America, higher interest expense, and rising steel and bronze costs;
- Our FY19 EPS estimate remains $4.44, up 11% from FY18, for the 8th consecutive year of record earnings;
- The shares offer an 8% free cash flow yield.
Matthews International is a provider of brand solutions, memorialization products and industrial technologies. The company's reporting segments are: SGK Brand Solutions, which includes brand development, deployment and delivery; Memorialization, which includes a line of memorialization products used primarily in cemeteries, funeral homes and crematories; and Industrial Technologies, which designs, manufactures and distributes a range of marking and coding equipment and consumables, industrial automation solutions, and warehouse automation systems, as well as manufactures and markets products and systems that employ different marking technologies, including laser and ink-jet printing.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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