MATERION Corp (NYSE: MTRN)

Sector: Basic Materials Industry: Other Industrial Metals & Mining CIK: 0001104657
Market Cap 2.85 Bn
P/B 4.78
P/E 87.35
P/S 2.45
ROIC (Qtr) 3.85
Div Yield % 0.41
Rev 1y % (Qtr) 1.85
Total Debt (Qtr) 531.74 Mn
Debt/Equity (Qtr) 0.57

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 159.98M provides strong 14.08x coverage of stock compensation 11.37M, indicating sustainable incentive practices.
  • Strong tangible asset base of 1.40B provides 2.64x coverage of total debt 531.74M, indicating robust asset backing and low credit risk.
  • Tangible assets of 1.40B provide exceptional 19.30x coverage of deferred revenue 72.77M, showing strong service capability backing.
  • Retained earnings of 908.69M provide full 1.74x coverage of long-term debt 521.58M, indicating strong internal capital position.
  • Operating cash flow of 159.98M provides solid 0.68x coverage of current liabilities 235.64M, showing strong operational health.

Bear case

  • Operating cash flow of 159.98M barely covers its investment activities of (96.32M), with a coverage ratio of -1.66, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 16.41M against inventory of 467.33M, the 0.04 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 159.98M provides thin coverage of dividend payments of (11.40M) with a -14.03 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (96.32M) provide weak support for R&D spending of 25.78M, which is -3.74x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 16.41M provide limited coverage of acquisition spending of (19.50M), which is -0.84x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Other Industrial Metals & Mining
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BHP BHP Group Ltd 162.30 Bn 17.99 3.17 -
2 TECK Teck Resources Ltd 24.54 Bn 27.27 3.23 3.67 Bn
3 MP MP Materials Corp. / DE 10.73 Bn -91.17 46.08 1.00 Bn
4 SKE Skeena Resources Ltd 3.07 Bn -36.58 0.00 0.04 Bn
5 MTRN MATERION Corp 2.85 Bn 87.35 2.45 0.53 Bn
6 VZLA Vizsla Silver Corp. 2.28 Bn -205.10 0.00 0.00 Bn
7 SGML Sigma Lithium Corp 1.76 Bn -65.03 15.16 0.12 Bn
8 ALM Almonty Industries Inc. 1.65 Bn -145.44 82.20 0.14 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.54 3.13
EV to Cash from Ops. EV/CFO 22.83 -51.74
EV to Debt EV to Debt 5.19 863.55
EV to EBIT EV/EBIT 66.78 -27.66
EV to EBITDA EV/EBITDA 31.35 566.13
EV to Free Cash Flow [EV/FCF] EV/FCF 31.01 -24.46
EV to Market Cap EV to Market Cap 0.97 0.59
EV to Revenue EV/Rev 2.38 42.69
Price to Book Value [P/B] P/B 4.78 10.60
Price to Earnings [P/E] P/E 87.35 -35.19
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.70 -16.20
Dividend Payout Ratio % Div Payout % (Qtr) 59.10 3.46
Dividend per Basic Share Div per Share (Qtr) 0.55 0.08
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 13.71 -0.53
Interest Coverage Int. cover (Qtr) 2.00 51.59
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 10.26 -444.92
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -8.19 3,116.99
Dividend Growth (1y) % Div 1y % (Qtr) 3.77 -0.80
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -63.27 -69.51
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -25.66 20.12
EBIT Growth (1y) % EBIT 1y % (Qtr) -45.49 -24.32
EBT Growth (1y) % EBT 1y % (Qtr) -61.20 -92.39
EPS Growth (1y) % EPS 1y % (Qtr) -74.02 -31.76
FCF Growth (1y) % FCF 1y % (Qtr) 688.34 -5,473.04
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.06 9.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.97 0.13
Cash Payout Ratio Cash Payout (Qtr) 0.05 0.01
Cash Ratio Cash Ratio (Qtr) 0.07 5.35
Current Ratio Curr Ratio (Qtr) 3.29 6.87
Debt to Equity Ratio Debt/Equity (Qtr) 0.57 0.74
Interest Cover Ratio Int Coverage (Qtr) 2.00 51.59
Times Interest Earned Times Interest Earned (Qtr) 2.00 51.59
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.60 -684.18
EBIT Margin % EBIT Margin % (Qtr) 3.64 -696.12
EBT Margin % EBT Margin % (Qtr) 1.82 -788.27
Gross Margin % Gross Margin % (Qtr) 19.50 11.29
Net Profit Margin % Net Margin % (Qtr) 1.10 -790.78