Hawaii-based shipper Matson (MATX) is facing uncertainty about its financial liability for a molasses spill in Honolulu harbor, and that could pressure its shares, says a feature in this week’s Barron’s.
Matson’s shares trade at a premium to the S&P 500, but could sell off as investors begin to discount the possibility that the shipper will be hit by large costs to clean up a spill, the article said.
Longer-term factors are positive. Matson was spun out of Alexander & Baldwin (ALEX), its parent for more than 40 years, in 2012. Last year, it generated $196 million in cash flow, enough to cover a $0.64 per-share dividend (the stock yields 2.6%), ensure an investment-grade credit rating, and set aside funds for new ships, the feature noted. Profit margins are nearly 20% higher than for rival Horizon Lines (HRZL), which has been hurt by a Puerto Rican unit.
Announced separately, S&P MidCap 400 constituent Matson will replace Kate Spade & Company (KATE) in the S&P SmallCap 600, and Kate Spade will replace Matson in the S&P MidCap 400.
In afternoon trading, MATX is down 5%, moving into the lower end of its 52-week range of $21.51 to $29.47.