Valued at a market cap of $700 million, Mattr (TSX:MATR) is a materials technology company serving transportation, communication, water management, and energy markets globally.
Operating through two segments, it manufactures flexible composite pipes and fibreglass storage tanks under the Flexpipe and Xerxes brands (Composite Technologies), plus heat-shrinkable products and low-voltage electrical solutions (Connection Technologies).
The TSX stock has grossly underperformed the broader markets since its initial public offering in 2010. Down 71% from all-time highs, MATR stock currently trades at a compelling valuation. Let’s see if you should buy this materials stock right now.
A strong performance in Q1
Mattr reported impressive results in the first quarter (Q1), showcasing the company’s resilience and strategic positioning despite global trade uncertainties. In the March quarter, its revenue from continuing operations increased by 52% year over year to $320.1 million. Moreover, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased 80% to $46.6 million, driven by the successful integration of the recently acquired AmerCable business.
The Connection Technologies segment delivered record-breaking results, with revenue more than doubling to $187.3 million, primarily due to the inclusion of AmerCable. The segment also captured new market share in premium heat-shrink tubing across industrial and automotive markets, despite a decline in global vehicle production.
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The Composite Technologies segment grew revenue 11% to $132.8 million, with adjusted EBITDA increasing 40% year over year. Xerxes’s fuel storage and water management products experienced substantial demand increases, with HydroChain stormwater products doubling in volume compared to the prior year.
The segment benefited from improved efficiency at newly established production facilities and the elimination of prior-year modernization costs. Mattr’s transformation over the past three years has enhanced its competitive position through business portfolio rationalization, North American production network modernization, and increased exposure to global electrification trends via the AmerCable acquisition.
Its United States-Mexico-Canada Agreement (USMCA) compliant products protect against current tariff implementations. Further, its diversified supply chain and reduced exposure to China mitigate trade risks.
Mattr maintains a strong balance sheet, ending the year with more than $50 million in cash and a net debt-to-adjusted EBITDA ratio of 3.6 times, which is sustainable. Moreover, the company expects this ratio to normalize below two times following anticipated asset sales.
Mattr remains committed to disciplined capital allocation, with a focus on debt reduction, technology investments, and share repurchases under its normal course issuer bid program.
In the near term, the management expects some softening in Q2 due to customer uncertainty around trade policies. However, the underlying long-term trends for Mattr’s primary businesses remain favourable, positioning the company for continued growth as market conditions stabilize.
Is the TSX stock undervalued?
Analysts tracking Mattr expect revenue to increase from $960 million in 2024 to $1.67 billion in 2029. Meanwhile, its free cash flow (FCF) is forecast to improve to $168 million in 2029, compared to an outflow of $59 million in 2024.
If the TSX stock is priced at 10 times forward FCF, which is reasonable, it will be valued at a market cap of $1.68 billion, indicating an upside potential of over 120% over the next four years. Given consensus price targets, MATR stock trades at a 23% discount in June 2025.
