Stock In Focus – TAM Stock Screener – Matrix Service Co (NASDAQ: MTRX)

Johnny HopkinsStock Screener2 Comments

As part of a new series here at The Acquirer’s Multiple, we’re providing a new feature called ‘Stock in Focus‘ where we focus on one of the stocks from our Stock Screeners.

One of the cheapest stocks in our Stock Screeners is Matrix Service Co (NASDAQ: MTRX).

Matrix Service Co is an engineering and construction provider for large industrial projects, primarily in the oil and gas, power, petrochemical, industrial, mining, and minerals markets. It offers engineering, fabrication, construction, and maintenance services, operating across four segments. Its Electrical infrastructure segment constructs and maintains a variety of power generation facilities. Its Oil, gas, and chemical segment offers construction and maintenance for oil and gas refining and petrochemical facilities. The entity provides construction services for petroleum storage tanks in its Storage solutions segment, and it also has an Industrial segment. It derives key revenue from the Storage solutions segment. The company has operations in the US, Canada, and other countries.

A quick look at Matrix’s share price history (below) over the past twelve months shows that the price is down 65%, but here’s why the company is undervalued.

Summary

Market Cap: $237 Million

Enterprise Value: $175 Million

Operating Earnings*

Operating Earnings: $46 Million

Acquirer’s Multiple

Acquirer’s Multiple: 3.82

Free Cash Flow (TTM)

Free Cash Flow: $39 Million

FCF/EV Yield:

FCF/EV Yield: 22%

Other Indicators

Piotroski F-Score: 7

Altman Z-Score: 3.79

Beneish M-Score: -2.94

*We make adjustments to operating earnings by constructing an operating earnings figure from the top of the income statement down, where EBIT and EBITDA are constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–income that a company does not expect to recur in future years–ensures that these earnings are related only to operations.

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2 Comments on “Stock In Focus – TAM Stock Screener – Matrix Service Co (NASDAQ: MTRX)”

  1. Hello
    As a practice I try and follow your calculations looking at the companies 10Q’s
    I know that market cap is shares outstanding * share price
    So I looked at Matrix’s 10Q dated February 6
    The shares outstanding I used was 26677219 and your share price of $7.46.
    This gives me a market cap of 199 million.
    38 Million less than yours.

    I then added total liabilities 269 million and subtracted shareholders equity of 323 million
    My EV came in at 199+269-323 = 145
    However if I used your 237 I would get 183 million which is only off by 8.

    I looked up all the definitions on the internet but they don’t use the same wording in the 10Q so its hard to know which figures to use.

    I would really appreciate if you could explain this and use a 10Q form as an example . Or send me link of one for calculating enterprise value
    Regards

    Matthew Hine

    1. Hey Matthew. The price on the chart is not my price, it’s the price that was displayed on the Morningstar chart when I pulled up the 1Y chart. The price when I wrote the article was closer to $9 as it is today. I can’t remember exactly which day I wrote the article but the price for MTRX has fluctuated between $7.88 and $9.48 just in the last five days. Regardless of that, if you multiply the outstanding shares (26,677,219) by around $9 you get a market cap of $240 million. Morningstar and GuruFocus currently have the market cap at $241 Million, as do we.

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