We came across a bullish thesis on Matthews International Corporation (MATW) on Substack by OpTrack.io. In this article, we will summarize the bulls’ thesis on MATW. Matthews International Corporation (MATW)’s share was trading at $22.72 as of March 18th. MATW’s trailing P/E was 28.90 according to Yahoo Finance.
A technician connecting a lithium-ion cell to a battery charging system.
Matthews International is a historic conglomerate with disparate business segments, including Memorialization, which primarily manufactures caskets; Industrial Technologies, which produces lithium-ion battery calendaring equipment and warehouse automation products; and SGK Brands, a packaging design and marketing firm. While the company has attempted to frame these segments as strategically related, investors have largely dismissed this notion. Matthews has historically been a lackluster investment, with a negative total shareholder return over the past decade, significantly underperforming relevant indices like the Russell 2000. Its weak performance attracted activist investor Barington, which, despite gaining the support of ISS and Glass Lewis, ultimately lost its campaign to replace board members. However, in a bid to secure votes from major passive funds, Matthews de-staggered its board and replaced several directors, leaving the company more vulnerable to future activist pressure.
Amidst this shareholder battle, Matthews executed a significant transaction, merging its SGK segment into a competitor, SGS, in exchange for $250 million in cash, $50 million in preferred equity, and a 40% stake in the new entity. With an enterprise value of $900 million and $100 million of EBITDA, the pro forma SGK-SGS combination represents an additional $150 million or more of potential value for Matthews. Further divestitures within SGK raised another $50 million, bringing Matthews’ immediate cash proceeds to $350 million. Pro forma for these transactions, Matthews’ financial position improves substantially, with reduced leverage and a simplified business model.
Despite its historical underperformance, Matthews now finds itself at a pivotal moment. Its core industrial businesses remain steady, and the company has a clear mandate to drive shareholder value. Management, aware that further stagnation could lead to another activist campaign in 2026, has strong incentives to act decisively. With its strengthened balance sheet, Matthews has multiple paths forward: it could pursue additional divestitures, execute a share repurchase program, or even consider an outright sale of the company. If the company fails to act, Barington or another activist will likely force the issue, potentially leading to a breakup or sale of the remaining assets.
With Matthews trading at historically low valuation multiples, the upside is substantial. A rerating to historical trading ranges could drive 160% gains, excluding the embedded value of its residual SGK stake. While execution risk remains, the combination of activist pressure, strategic realignment, and balance sheet improvements creates a compelling risk/reward opportunity. Investors now have a clear catalyst path, with management facing an implicit deadline to either unlock value or be replaced.
Matthews International Corporation (MATW) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held MATW at the end of the fourth quarter which was 13 in the previous quarter. While we acknowledge the risk and potential of MATW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MATW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.