Nyse Order Imbalance 28055.0 Shares On Sell Side

Over the past six months, Matson’s stock price fell to $107. Shareholders have lost 6.1% of their capital, which is disappointing considering the S&P 500 has climbed by 17.2%. This might have investors contemplating their next move.

Is now the time to buy Matson, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.

Why Is Matson Not Exciting?

Despite the more favorable entry price, we're cautious about Matson. Here are three reasons we avoid MATX and a stock we'd rather own.

1. Lackluster Revenue Growth

We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Matson’s recent performance shows its demand has slowed as its annualized revenue growth of 4.3% over the last two years was below its five-year trend. We also note many other Marine Transportation businesses have faced declining sales because of cyclical headwinds. While Matson grew slower than we’d like, it did do better than its peers.

2. Free Cash Flow Margin Dropping

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Matson’s margin dropped by 8.3 percentage points over the last five years. Continued declines could signal it is in the middle of an investment cycle. Matson’s free cash flow margin for the trailing 12 months was 4.1%.

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Matson’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

Matson’s business quality ultimately falls short of our standards. After the recent drawdown, the stock trades at 9.4× forward P/E (or $107 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better investments elsewhere. Let us point you toward the most dominant software business in the world.

Stocks We Like More Than Matson

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Matson’s third quarter results saw revenue and profit come in ahead of Wall Street expectations, despite ongoing headwinds from lower freight rates and weaker container volumes in its China service. Management attributed the year-over-year decline primarily to “continued uncertainty and volatility arising from tariffs and global trade,” especially in the Transpacific lane, while also highlighting stable or slightly improved volumes in Hawaii and Alaska. CEO Matthew Cox explained that “operating income was lower year-over-year, primarily due to lower year-over-year freight rates and container volume in our China service,” with muted demand caused by customers advancing cargo ahead of tariff deadlines. However, Matson maintained premium pricing for expedited service and did not pass on new port entry fees to customers, reflecting a disciplined pricing approach even as utilization rates fell.

Is now the time to buy MATX? Find out in our full research report (it’s free for active Edge members).

Matson (MATX) Q3 CY2025 Highlights:

• Revenue: $880.1 million vs analyst estimates of $837.4 million (8.5% year-on-year decline, 5.1% beat)
• Adjusted EPS: $4.24 vs analyst estimates of $3.25 (30.3% beat)
• Adjusted EBITDA: $212.3 million vs analyst estimates of $167 million (24.1% margin, 27.1% beat)
• Operating Margin: 17.9%, down from 24.6% in the same quarter last year
• Market Capitalization: $3.40 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Matson’s Q3 Earnings Call

• Jacob Lacks (Wolfe Research) asked if current pricing levels in the Transpacific lane are sustainable given spot rate weakness. CEO Matthew Cox said Matson’s pricing remains above market rates due to its expedited service value, but acknowledged absolute freight rates may decline seasonally.

• Jacob Lacks (Wolfe Research) inquired about utilization headwinds and whether sourcing changes out of China are impacting them. Cox explained that lower utilization was mainly due to inventory front-loading, not supply and demand imbalances, and that Matson could not lower prices enough to stimulate more demand.

• Omar Nokta (Jefferies) questioned whether Matson could recover the $6.4 million paid in port entry fees. Cox replied that the company awaits regulatory guidance on possible refunds following the recent trade deal.

• Omar Nokta (Jefferies) followed up on load factor dynamics, asking if Matson is still operating below historical utilization. CFO Joel Wine confirmed utilization remains below full due to the company’s choice to maintain premium pricing.

• Reed Seay (Stephens Inc.) asked about customer attitudes toward sourcing from China and the diversification trend. Cox observed that most customers are pursuing a “China Plus One” strategy, increasing sourcing from Vietnam and other regions, though China remains a major supplier.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will be closely watching (1) the impact of the U.S.-China trade agreement on demand and pricing for Matson’s expedited Transpacific services, (2) volume trends in domestic lanes like Hawaii and Alaska as local economies evolve, and (3) Matson’s ability to maintain cost discipline while investing in new vessels and service reliability. Progress on customer supply chain diversification and updates on the logistics segment’s recovery will also be important indicators.

Matson currently trades at $108, up from $98.02 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

The Best Stocks for High-Quality Investors

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Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return).

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.