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Mark Robertson is the founder of www.manifestinvesting.com. Manifest Investing features an e-newsletter focusing on successful long-term investing including web-based investment research and features for stock and fund screening. Other tools provide resources for portfolio design and management.... More
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Manifest Investing LLC
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Weekly Message: Expected Returns
  • Death & Taxes: Matthews (MATW) Analysis 0 comments
    Apr 19, 2012 9:28 PM | about stocks: MATW

    During our weekly updates, we bring companies to the attention of investors by focusing on above-average return candidates. In the wake of filing our tax returns, it seems fitting that funeral services and memorial leader Matthews (NASDAQ:MATW) was among the companies of interest.

    MATW currently has a 3-5 year low annualized total return forecast of 17%. We believe that the low total return forecast from Value Line is a useful, representative and fairly reliable "second opinion" for seeking candidates for consideration.

    At Manifest Investing, we focus on three major analysis milestones while establishing a return forecast for any company:

    (1) Sales growth forecast

    (2) Profitability (projected % net margin)

    (3) Projected Average P/E

    In the case of MATW, we feel a sales growth forecast of 5-6% could combine with a projected net margin of 8% to deliver a 5-year EPS forecast of $3.77. Using a projected average P/E of 16x, the annualized price appreciation is ~14%. Combining a projected dividend yield of 1.0%, the projected annual return is ~15%.

    MATW has a financial strength rating of 87 (A++ = 100) and an excellent quality rating.

    The following video (8:42) provides a closer look at the fundamental analysis milestones and checks in on technical analysis highlights that suggest potential support levels in the $28-30 range and a relative strength index (RSI) of 42, suggesting a condition closer to over-sold (RSI<30).

    www.youtube.com/watch?v=WgIQaK8FPDo

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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