Matson

IThe business

Matson moves containers by sea. It has two segments. Ocean Transportation earned $455.6M of operating income on $2,735.5M of revenue in 2025. Logistics, which brokers rail and truck freight, forwards freight to Alaska and runs warehouses, earned $44.2M on $609.0M.² The ocean segment is four lines of business that share ships, terminals and people: Hawaii, Alaska, Guam and the islands around it, and China.

Hawaii is the anchor. Matson sails three strings of ships from Long Beach, Oakland and Tacoma, with five departures a week and three arrivals a week in Honolulu, and a barge network that takes cargo on to Maui, Kauai and the Big Island.² It carried 143,000 forty-foot containers there in 2025 R (reported). Alaska is the second line: Tacoma to Anchorage, Kodiak and Dutch Harbor, 81,900 containers in 2025, plus a seafood service from Alaska to Asia.² Guam gets a weekly sailing as part of the China loop, 18,000 containers in 2025, and the same ships call at Okinawa for US government freight and feed Micronesia.² In 2025, 51% of ocean revenue came from the Hawaii and Alaska trades that the Jones Act protects; it was 50% in 2024 and 55% in 2023.²

China is the one that moves the profit. The China-Long Beach Express (CLX) carries goods from Ningbo and Shanghai to a terminal at Long Beach that Matson uses on its own, and on the way out carries cargo for Honolulu, Guam and Okinawa. A second service, the Matson Asia Express (MAX), runs on chartered ships. The cargo is mostly e-commerce parcels, clothing, consumer electronics and shoes.² Customers pay a premium to get it faster and to find it ready when the ship arrives. China was 130,400 containers in 2025, 29% below the 184,800 of 2021 and double the 64,000 of 2019 C (calculated).²¹⁰¹¹

Matson does not say how much of its profit comes from China. It reports Ocean Transportation as one segment. I can see the effect only in the totals. In 2019 the segment earned 5.4% on revenue. In 2022 it earned 36.1%. In 2025, a year of tariff shocks and 9.5% fewer China containers, it earned 16.7% C (calculated).²¹³¹⁴ That gap is the China premium plus Hawaii’s price rises, and I can’t split the two. Everything later in this page that depends on China carries that doubt.

How the money works

Ships, crews, terminals and the people to run them cost much the same whether the ship is full or not. Rates and volume therefore fall mostly to profit on the way up and mostly out of it on the way down. In 2023 revenue fell 29% and operating income fell 75%.²¹⁴ Fuel is passed through a surcharge, and the Surface Transportation Board presumes a domestic rate to be reasonable if it moves less than 7.5% up or 10% down in a year, adjusted for inflation.² That rule is a ceiling on how fast Matson can reprice Hawaii, and it is also the reason Hawaii does not swing the way China does.

The shape of those numbers is the first thing to take in. Hawaii and Alaska together carried 224,900 containers in 2025, flat on 2023. The growth, and the volatility, is in China, and in 2026 China is the only line that is rising.²¹²³ Hawaii’s economy is slow: the University of Hawaii forecast Matson quotes has real growth of 0.6% in 2026 and 1.6% in 2027 and 2028, a falling population, and 9.58M visitors, 0.7% fewer than last year.⁶

Logistics and the terminal stake

Logistics is the smaller business and a steadier one. It arranges rail and truck freight (competing with C.H. Robinson, Hub Group, RXO and J.B. Hunt), consolidates freight into Alaska through Span Alaska, and runs four warehouses.² It has earned between $12M and $72M a year for ten years, never more, and $44.2M in 2025 on a 7.3% margin C (calculated). In the third quarter of 2026 its revenue rose 37% on brokerage and its operating income rose $2.5M to $16.1M.³ Matson also owns 35% of SSA Terminals (SSAT), which runs seven West Coast terminals, three of them used by Matson’s own ships. SSAT contributed $32.5M in 2025, a loss of $1.0M in 2024 after an $18.4M write-down, and $17.2M in the first nine months of 2026, down from $23.2M.²³

Where Matson is from

Matson says it was founded in 1882. It became a separate listed company on 29 June 2012, when Alexander & Baldwin split in two and the holding company took the name Matson, Inc.¹⁵ It is incorporated in Hawaii. Every annual report cover I opened, for fiscal 2012 and 2019 to 2025, gives its principal executive office as 1411 Sand Island Parkway, Honolulu, which is the site of its 105-acre Honolulu terminal, and so does the 8-K filed with the latest results.¹⁵²¹⁶ It keeps a large presence on the mainland, too: the Oakland warehouses, the three West Coast terminals and an investor relations line with a 510 area code.²³ The lead independent director, Stanley Kuriyama, used to run Alexander & Baldwin.⁸ I picked Matson for this site because it is, by my check, the largest listed company headquartered in Hawaii: a market value of $6.32B against $3.15B for First Hawaiian, $2.79B for Bank of Hawaii and $1.47B for Hawaiian Electric. I did not check every Hawaii-based company, and the market-value figures are the exchange’s, not mine.¹⁷

The latest quarter

The third quarter of 2026 was strong. Revenue was $1,113.5M, up 26.5%. Operating income was $255.2M against $161.0M a year before, and earnings per share were $6.96 against $4.24.³ Ocean margin was 26.8% against 20.5%. China containers rose 16.0% on a poor comparison, because tariffs in April 2025 had flattened last year’s peak season, while Hawaii fell 0.3%, Alaska 4.8% and Guam rose 4.3%.³ The company said it expects strong demand and high rates in China to last through year end and into early 2027, expects its ships to be full or nearly full in the fourth quarter, and expects fourth-quarter operating income to be about 50% above the $143.7M of a year ago, or about $216M C (calculated).³⁶ It raised its outlook. The stock had closed at $211.44 before any of this was public: the release was filed at 4:10 pm New York time, after the market shut.¹¹⁶

IIThe moat

Matson has two kinds of protection and they are not alike. One is a law. The other is a service customers like.

The law

The Jones Act says ships that carry goods between US ports must be built in the US, fly the US flag, be crewed mostly by Americans, and be owned by a company that is American-controlled and at least 75% American-owned.² The West Coast to Hawaii and the West Coast to Alaska are both covered. A Chinese or Korean line cannot put a ship on those routes however cheaply it can run one. Guam has a lighter rule: the ship must be US-flag and mostly US-crewed, but need not be US-built.² In Hawaii Matson’s only Jones Act competitor with container ships is Pasha, plus a small barge line from Seattle. In Alaska it faces one roll-on/roll-off operator and two barge lines.²

The law alone does not make the money. The market is small and not growing: Hawaii’s volume was 148,700 containers in 2018 and 143,000 in 2025.¹¹² Price rises are held in check by the Surface Transportation Board’s rule. And the entry price is large. Three new 3,440-container ships cost about $1,006M before owner’s items and change orders, or about $335M a ship C (calculated).² A new rival has to spend that for each ship and win freight against a carrier with five departures a week. That is a barrier, and it is why two firms share Hawaii. It also is the bill Matson itself pays every time it replaces a ship, and I come back to that in Valuation.

The law under stress

In March 2026, during the war with Iran, the Department of Homeland Security issued a limited waiver of the Jones Act at the request of the Department of War. Customs guidance of 17 March covered at least 659 products listed by tariff code, let them move between US ports on foreign-flag ships, and set no limit by location, so it reached Hawaii and Alaska on paper.¹⁸ It was extended once already, and again on 10 August for 90 days, with relief narrowed to case-by-case review of voyages, about 208 exemptions granted by 3 August, and a White House line that it had raised deliveries of gasoline, diesel and jet fuel. The second extension runs to about mid-November, 90 days from 17 August.¹⁹ In July, Speaker Johnson and 51 other House Republicans wrote to the White House asking it to let the waiver lapse.²⁰

Here is what I can and can’t say. I found no report of containerized goods for Hawaii moving on foreign ships under the waiver, and the reports I read concern fuel and similar cargo, so I do not think it has touched Matson’s freight. I did not open the Customs notices themselves, so I can’t confirm which products are listed. What it shows is that a waiver is a lever a president can pull in a crisis, and that the lever was pulled for the longest stretch anyone remembers. Matson’s own list of risks names “repeal, invalidation, substantial amendment or waiver” of the Act first.³ The 10-K says the Act has broad support in both houses of Congress and the executive branch, and that the geopolitical situation has strengthened that support.² Both can be true. I carry it as a risk with no number, because I can’t price a political act.

The service

China has no law behind it. Matson competes there on fast and dependable service: fixed arrival days, cargo ready to leave the terminal sooner, and its own berths at SSAT’s Long Beach terminal.² The company’s own risk factors list its ability to offer a differentiated service that customers will pay a significant premium for.² That is the right risk. The premium exists because shippers pay it. It will not exist if they stop.

The evidence on what shippers pay is mixed, and I read it carefully. In the Drewry index, the Shanghai to Los Angeles spot rate was $7,514 a 40-foot box on 29 October 2026, against $2,438 a year earlier, 3.1 times as much.⁵⁷ Matson says its rates are “elevated” and its ships full or nearly full.⁶ But Drewry also says the rate fell 6% in the week, six sailings are blanked next week, it expects further falls, and the US retail federation expects November imports to drop 11% from October.⁵ The company says the squeeze comes from weather, blank sailings, port congestion and extra sailings that rivals laid on to clear backlogs, and that the big networks are matching capacity to demand.⁶ None of that is a permanent change in the market. It is a shortage, and shortages end.

IIIThe competitive advantage

The moat says where Matson is protected. This section is about what it does better than the people it competes with.

It is a schedule business. In Hawaii Matson runs five departures a week on fixed days, and the company says that lets customers carry less stock.² In China it sells arrival on a fixed day and cargo that can leave the terminal the day it lands. Both need a controlled chain: ships it owns or charters, terminals through SSAT that serve its own sailings first, off-dock yards, its own chassis and a trucking arm for the last miles.² At Honolulu it has added three cranes of 65 long tons, rebuilt three others and renewed the power supply, and it plans to take over a neighbouring pier and part of another when Pasha moves to its Kapalama terminal in 2027.² Those are the reasons the Hawaii share is stable and the reasons the China service gets a price. They are costs that a newcomer would need years to copy.

The ships, which are the other half of the advantage

A schedule business needs ships that run when they are supposed to. Matson’s owned fleet has about $2.4B of cost behind it, and its cranes, containers and chassis another $900M.² Fourteen big owned ships are listed in the 10-K. Four are new, built 2018 to 2020. Ten are not, and the median age of all fourteen is 22.5 years C (calculated). Two ships were built in 1982, and three ships named for Alaska ports in 1987.²

The three Aloha class ships under construction at Philly Shipyard, now owned by Hanwha, are due in the first quarter of 2027, the third quarter of 2027 and the second quarter of 2028. They will go to the China service and three existing ships will move to Alaska.² Each adds about 500 containers a voyage in China, and Matson says that is 15,000 a year in total. Against the 130,400 containers it carried there in 2025, that is 11.5% more capacity C (calculated). I read the 15,000 as all three ships, and I take it to be in the same units as the volumes, but the 10-K does not make that explicit.² The cost of the program is about $1.0B before owner’s items and change orders, and by the end of 2025 Matson had paid $426.8M of it.² I treat all of the $1.0B as the cost of staying in business, not of growing. Some of it buys growth, and that makes my figure for what is needed to stand still a little high.

Evidence the advantage is widening

• The ocean margin was 16.7% in a poor year, 2025, against 5.4% in 2019 and 11.9% in 2023 C (calculated).²¹³
• The third-quarter ocean margin was 26.8%, up from 20.5%.³
• Matson says its Hawaii share is stable, so the 2.3% fall in nine-month volume is the market and not lost share.³
• Capacity on the China loop will be about 11.5% bigger from mid-2028 on the same schedule C (calculated).²
• The Honolulu terminal gets room to grow when Pasha leaves.²

Evidence it is narrowing

• Hawaii volume is down 2.3% in nine months, and 2025’s 143,000 is below 2018’s 148,700.³¹¹²
• Pasha moves to a new terminal at Kapalama in 2027. That frees piers for Matson, and it gives its one rival a terminal built for it.²
• Six chartered ships, 18 to 20 years old, are on contracts ending between August 2027 and March 2029. Four of the six end in the second half of 2027, when the first two Aloha ships arrive. What a replacement charter costs depends on the market of that day, and 2027 may look like 2026.²
• Rivals on the Pacific are adding extra sailings and cancelling fewer of them as congestion eases, and the company says port congestion at some Asian ports “began to ease.”⁶

Where Matson wins and where it loses

Matson wins where a customer needs freight on a fixed day to an island or a far port and can’t go around the law: food and household goods to Honolulu, supplies to Kodiak, military freight to Okinawa. It also wins on speed in China for goods that must move fast, such as e-commerce parcels. It loses on price to anyone who will take slower service. In Alaska it concedes bulky, slow freight to barges. In China it concedes the cheapest freight to the global lines, and it loses the premium when the market has more ships than cargo, as it did in 2019. Since March 2026 it has also been the beneficiary of a shortage it did not create.

IVManagement

Who runs it

Matt Cox is Chairman and Chief Executive. He has been chief executive since the 2012 separation and chairman since April 2017, after more than 24 years at Matson and more than 38 in transport and logistics.⁸ Joel Wine is chief financial officer. The independent directors elected Stanley Kuriyama, the former head of Alexander & Baldwin, as lead independent director, and a majority of the board and all committee members are independent.⁸ The management is Hawaiian-rooted and long-serving. That is a strength for relationships, and a risk for fresh thinking when the market changes.

How they are paid, and what that pays them to do

Mr Cox’s pay in 2025 was $6.49M: $0.96M of salary, $4.02M of stock awards, $1.23M of annual bonus and the rest in pension value and other items.⁸ The proxy says 83% of his target pay is at risk. The mix is 17% salary, 20% annual bonus and 63% long-term stock awards.⁸ The bonus is paid on one number: consolidated EBITDA. In 2025 EBITDA was $704.7M, 97.8% of plan, and the payout was 89%.⁸ The stock awards pay on a three-year average of return on invested capital (75% of the weight) and a three-year share return against two index groups (25%).⁸

Three things follow. First, EBITDA counts neither the ships nor their replacement. A dollar of EBITDA from a ship that costs $335M and one from a ship that was paid off in 1990 pay the same. Second, the 2025 awards define invested capital as debt plus equity less the Capital Construction Fund and less ships still being built.⁸ While the $1.0B fleet program is under way, it is not in the denominator. Third, charters flatter the ratio: a leased ship costs an operating expense, so it adds nothing to debt or equity, which is how return on capital is counted. This is my reading of the definitions, not a statement by the board.

The 2023 to 2025 awards show the effect. The goals were set in January 2023, after a year of $1.35B of operating income. Threshold was a 5.4% return, target 6.7% and maximum 8.7%. The result was 17.9%, double the maximum, and the share return ranked in the 85th percentile of mid-cap stocks and the 84th among transport stocks. Both paid 250% of target.⁸ The business did earn that return. But a bar whose maximum was less than half of what the business went on to earn was not much of a test.

How much of their own money is in

Mr Cox owned 242,770 shares on 20 February, worth $51.3M at $211.44 C (calculated), which is eight times his 2025 pay. All current directors and executive officers together owned 2.51% of the company.⁸ The policy bans hedging and pledging and the clawback is no-fault.⁸ Those are good signs. The Forms 4 for 2026 show a different pattern. Fifteen insiders sold shares on the market and none bought, $28.4M in all C (calculated).⁹ Mr Cox sold 60,000 shares for $12.6M between June and October, in six lots of exactly 10,000, at prices from $186 to $231. The October filing says the sales were made under a Rule 10b5-1 plan he adopted on 9 March 2026, when the shares closed at $153.42.⁹ Sales on a plan are not a signal in themselves. But 60,000 shares is a quarter of what the proxy shows him owning in February C (calculated), though new shares vest each January, and it means the stake behind the pay is smaller than the proxy table suggests.

What they did with capital over a full cycle

Between 2021 and 2025 Matson earned $2.5B of owner cash C (calculated) and returned $1.5B: $1.25B of buybacks and $0.23B of dividends.⁴ It also cut debt from $760.1M at the end of 2020 to $361.2M at the end of 2025 and built the Capital Construction Fund from nothing to $532.7M.¹⁴² Diluted shares fell from 43.5M in 2020 to 30.1M in the third quarter of 2026, down 31%.⁴³ It paid an average of about $91 for 13.9M shares, and at $211.44 those shares are worth $2.9B C (calculated). No year averaged above $126. In 2026 the pace continued at higher prices, and the third quarter’s $59.8M bought about 0.3M shares, around $200 each C (calculated).³ At my base value of $143, buying at $200 does not create value for continuing owners.

The earlier decade matters just as much. In 2016 to 2019 Matson spent $1.2B of capital, which included most of the cost of the four Aloha and Kanaloa class ships, so owner cash was negative every year, −$307M in all C (calculated).⁴¹³ It also paid $112.6M in 2016 for Span Alaska, whose goodwill is still reviewed by the auditors as a critical matter and whose parent segment earned $44.2M in 2025.⁴² The ships were ordered before the 2021 and 2022 boom, in which Ocean Transportation earned $1.1B and $1.3B R (reported). I can’t tell skill from luck in that order, and I doubt management could either. What I can say is that they built before they needed to, they paid down the debt when cash came in, and they bought back stock for the most part when it was cheap. That is a good record. It does not tell me what they will do at $211.

VFinancials

Ten years of numbers tell one story: a small, steady profit, a very large and short one, and a middle that is still well above the start.

What an owner could really take out

Over ten years Matson reported $3.9B of net income and $4.8B of operating income. The cash an owner could have taken, after all the ships and after stock pay, was $2.4B, or 61% of net income C (calculated). Eighty per cent of it came in three years, 2021 to 2023 C (calculated).

The reason is the fleet. In every year since 2016 Matson has spent between $179M and $401M on capital, which is more than its depreciation each time. Its 2025 depreciation, with dry-docking amortization, was $195.8M, and total capital spending was $393.4M.² The Q3 slides set twelve-month operating cash flow of $637.5M against $431.8M for “maintenance” capital of $129.6M, dividends of $44.6M and buybacks of $257.6M.⁶ That leaves out the money for new ships, which is $375M this year, and for dry-docking, about $45M. It also leaves out what comes after the Aloha class. Operating cash flow after all of it, which is what an owner sees, was $131M in 2025, and I estimate $150M to $200M for 2026 E (estimate), in a year when operating income is the highest since 2022.

Quality of earnings

• The cycle. The two best years, 2021 and 2022, are 53% of the decade’s operating income C (calculated). A reader who takes a ten-year average is averaging a boom into a base.
• Stock pay. Share-based compensation was $22.7M in 2025 and is added back in the cash flow statement; I deduct it.²
• One-offs. The 2025 tax rate of 16.7% included an $18.5M, or $0.59 a share, adjustment to deferred taxes; without it the rate was 20.1%. Interest income was $31.7M in 2025 against $48.3M in 2024, which included $10.2M on a tax refund, and is guided to about $20M this year as the fund is spent.²³
• Taxes. The Capital Construction Fund lets Matson deposit pre-tax earnings for ship purchases; money later withdrawn for US-built ships reduces the tax basis of the ship. So it defers tax and does not remove it. Deferred income taxes were $702.3M at 30 September 2026.²³ Cash taxes paid were $86.1M in 2025 and $83.8M in nine months of 2026.⁴³ I use a 21% rate, close to the guide.
• Receivables. Operating cash flow was $460.6M in nine months, helped by earnings and held back by $110.8M of extra receivables, because freight bills are bigger. If rates fall that comes back as cash, one of the few things that cushions a downturn.³
• Leases. Operating leases cost $147.9M in 2025, mostly for the chartered ships, and sit inside operating income. The present value of the commitments is $375.3M. Payments due fall from $139.5M in 2026 to $106.2M in 2027 and $55.8M in 2028, because the charters end. I count that as cost to come, since the ships have to be replaced or chartered again.²
• Pensions. The company contributes to multi-employer plans and carries withdrawal liabilities, and says it does not intend to withdraw. I don’t value them separately.²

The balance sheet

On 30 September 2026 Matson had $221.9M of cash, $298.6M in the Capital Construction Fund, and $331.2M of debt before deferred fees, of which $291.5M is long term. That is net cash of $189.3M C (calculated). It has $544.2M of unused revolving credit, and equity of $2,928.3M, so book value is about $99 a share C (calculated).³ Debt is 0.4 times trailing EBITDA of $832.0M C (calculated).³ The $298.6M in the Fund is earmarked, in effect, for ships: about $353M is left to pay on the three Aloha vessels after 30 September, being $122.7M for the rest of this year, about $205M in 2027 and about $25M in 2028 C (calculated).³² So the Fund and the ships cancel almost exactly, and I count both in my model. I add no debt for the chartered ships, because their cost is already inside operating income.

VIValuation

First, how this goes badly wrong

Before the numbers I asked what would most likely hurt an owner here, and worked back. Three things stand out.

The shortage ends while the ships are still being paid for. Matson’s profit this year is high because the Pacific is short of dependable capacity, and Matson says so. Shortages end. If mid-cycle operating income is $350M and not $500M, my base falls from $143 to $93. Each $75M of mid-cycle operating income is about $24 a share E (estimate).

The law. Hawaii and Alaska are about half of ocean revenue, and they are the steady half. The waiver of 2026 did not touch container freight as far as I can find, but it did show that the protection can be set aside in a crisis. I don’t put a number on repeal. If those lines lost $100M of operating income for good, that would cost about $32 a share E (estimate).

The next ships cost more than I expect, or money is spent at the wrong time. The company has bought stock at around $200 while owing $353M on ships it has not yet received. Each $30M a year of extra ship cost takes about $12 a share off my base. The company’s cost for the Aloha class ships is known. The cost of the ships after them is not.

None of these needs anything exotic. They set my bear case, and they are why I start from the cash that reaches an owner and not from earnings.

What an owner could really take out

I value cash after stock pay and after the capital needed just to stand still. Operating income is already after stock pay. From it I take 21% tax, add back depreciation and dry-dock amortization, and take away other capital spending, dry-docking payments and a charge for replacing ships. That charge is the part that is easy to leave out. Fourteen big owned ships cost about $335M each to replace at today’s price, and the three Aloha ships suggest that. Spread over a 35-year life, that is about $134M a year C (calculated). I use $130M in today’s money, rising 3% a year from 2029, and I treat the range $100M to $160M as honest uncertainty. It is a rough charge, because I don’t know the life of the next ships and I have left out the smaller feeder ships and barges.

On the basis I use, this year’s owner cash is about $446M, against net income of about $573M E (estimate), so 78%. In my base for 2030 it is $325M against net income of $406M, so 80%. In 2026 the ships being built take another $375M, which is why actual cash after them is much lower.

What the price implies

Put the other way, what does $211.44 need? At a 10% discount rate and 2.5% growth after 2036, the price needs about $709M of operating income in 2030, on the shape of my base, or about $674M a year from 2027 growing at 2.5%. This year’s figure is $691M. In other words, the price asks the best year since 2022 to be the normal year.³

What I can’t judge

• How much of the profit is China. Matson does not split it. I can see only that ocean margin tripled from 2019 to 2025, and that China volume doubled.
• How long the shortage lasts. It comes from weather, port congestion, a war and tariff swings. I can’t forecast any of them. Matson says it lasts into early 2027; Drewry expects rates to ease.³⁵
• What the next ships cost, and when they are needed. The 10-K does not name which ships retire after the Aloha class. My $130M a year is a plausible number, not a known one.
• What replacement charters cost. Six chartered ships end between August 2027 and March 2029, and the lease cost is in operating income.
• Politics. The Jones Act can be waived or changed, and I can’t price it.

Because I can’t know these, I show a range and the price’s position in it, and I don’t treat $143 as more exact than it is. A fair reading of my work is that the base is somewhere from $120 to $170.

The discount rate

I ask 10.0%. That is one point higher than I use for CPKC, a railway with steadier profit.²¹ A company whose operating income has moved between $129M and $1,354M in seven years, and which has to spend $1.0B on ships, can’t be valued like a toll road. At 9% my base is $163 and at 11% it is $127.

Three cases

Bear

Ships catch up with cargo on the Pacific in 2027 and the China premium shrinks toward its 2019 size. Hawaii and Alaska stay flat in volume, charters are renewed at market rates and costs rise. Operating income falls to $460M in 2027 and $250M in 2030 (it was $343M in 2023 and $129M in 2019), then grows 1.5%. Value $61.

Base

Freight stays firm into the first half of 2027, then fades. By 2030 operating income is $500M, about 8% above the 2023 to 2025 average of $465M, and it grows 2.5%. The Aloha class ships come in on time and the next round of ships costs 3% a year more than today’s. Value $143.

Bull

The extra 11.5% of capacity fills, shippers keep paying for dependable speed, and the domestic lines hold. Operating income stays near $700M, about this year’s level, and grows 3%. Value $216.

Other uses of the same dollar

The best comparison on this site is CPKC. At its price I get 4.6% a year on my base cash flows against the 9.0% I ask, a shortfall of 4.4 points. Matson at $211.44 gives 7.4% against 10.0%, a shortfall of 2.6 points.²¹ By my numbers neither clears its bar at today’s price, and Matson misses by less. That is not an argument for Matson. It says only that Matson’s price sits less far from my bar than CPKC’s does. The company’s own alternative is its buyback. At $200 a share, against my base of $143, I get less than a dollar of value for each dollar spent E (estimate). I do not quote a Treasury yield here because I did not take one from a source for this page.

What the market paid before

The stock was $98.07 a year ago, and is 2.2 times that now. The market has paid very different prices for a dollar of Matson’s earnings. At the end of 2022, on $27.07 a share, it paid 2.3 times. At the end of 2019, on $1.91, it paid 21.4 times. A cyclical stock tends to trade cheaply at the top and dearly at the bottom, because buyers know the profit will not last. At 11.2 times my 2026 estimate it is not selling at a peak multiple. Somebody in the market expects this profit to last.

The margin of safety

I set it from the bear case: I want a price at which my $61 bear value is at least three quarters of what I pay, which is $81. The price is 2.6 times that. The last close below $81 was $79.66 on 17 July 2023, and a year ago the close was $98.07.¹ I am not saying the price will fall to $81. I am saying a buyer there would be paying for the Hawaii and Alaska lines and getting the China service as a gift.

Two different questions

The first is how good the business is. By the numbers it is good: a 17.9% average return on capital over three years, net cash, a leading position in two small protected markets and a service that shippers pay extra for.⁸³ The second is how good the price is. At $211.44 the price is 48% above my base value and 2% below my bull, which assumes this year’s earnings power is permanent. Those are different answers. A good business can be a poor purchase when the price already includes its best year. This looks like that case, and the market may be seeing something I am not. The strongest form of that is a lasting premium for dependable speed.

VIIThe case for the price

What most people miss

Three facts cut in Matson’s favour and get little attention. First, even in 2025, a year of tariff shocks with 9.5% fewer China containers, Ocean Transportation earned a 16.7% margin against 5.4% in 2019.²¹³ Second, the share count. Diluted shares fell 31% from 2020 to the third quarter of 2026, and the $1.26B spent in 2021 to 2025 bought shares at an average of $91 that are worth $2.9B at $211.44 C (calculated).⁴³ Third, the balance sheet is stronger than the build suggests. With a $1.0B fleet program under way, Matson has net cash of $189M, debt at 0.4 times EBITDA and $544M of unused credit.³

The bull case

I found no named investor or analyst with a published view on Matson that I could check against a filing or a dated document, so I give the case as the company makes it. The proxy lists only BlackRock, Vanguard and Dimensional as holders of more than 5%, and index funds don’t argue cases.⁸ In the third-quarter release, Mr Cox says speed and reliability are the differentiators that let the China service earn a premium while global shipping networks are under pressure.³ The slides add that the peak season has lasted longer than expected, that October demand was strong, that air cargo is tight, and that the ships will be full or nearly full in the fourth quarter.⁶ The 10-K adds that Congress and the executive branch broadly support the Jones Act.²

In plain words: one business is a protected franchise in three small markets that earns steady money. The other is a premium service on the busiest trade in the world, with a larger fleet coming. A less predictable world makes shippers pay for ships that arrive on the day promised. If that is right, operating income of $700M a year is a floor and not a peak.

Against reality

If China keeps earning like this, and the Hawaii and Alaska lines hold, the price is possible. That is my bull case, $216, and the price is 2% below it. To get there, operating income has to stay near this year’s $691M for the next ten years. Since 2016 it has been above $600M in three years: 2021, 2022 and, on my estimate, 2026. In the other eight it averaged $284M C (calculated).⁴³ It fell from $1.35B in 2022 to $343M in 2023, so a boom of this kind has ended within a year before.

It helps to multiply it out. The price needs five things. A Pacific that stays short of capacity through 2028: about 35%. Matson keeping its premium and volume as rivals add ships: 70%. Hawaii, Alaska and Guam holding their volume: 80%. The Jones Act staying intact: 90%. The Aloha ships on time and on budget: 85%. Multiplied, that is about 15%, or one chance in seven. They are my guesses, they are not independent of each other, and I do not use them in the values E (estimate).

What a 10x would take. Ten times $211.44 is $2,114, or $63.3B of market value on today’s shares. At 12 times earnings, that needs about $5.3B of net income, which is 9.2 times this year’s estimate and 5.0 times Matson’s best year, 2022. At a 20% net margin that means about $26B of revenue, 7.1 times the last twelve months, which is 22% growth a year for ten years. Matson’s revenue grew 6.2% a year from 2016 to 2025. Its best decade for the share price, with a freight boom in the middle, multiplied it 6.0 times. Hawaii’s volume has not grown in seven years. A tenfold price is not plausible for a company of this kind, and I would say so about any shipper this size.

Where I come down

Three things moved me: the margin in the weak year of 2025, the record of buying back stock and paying down debt, and a fleet program funded without borrowing. The strong third quarter moved my 2026 estimate and not my base, because a quarter like that is what a shortage looks like and my base is about the years after it. What would raise my values is evidence that mid-cycle operating income is above $575M: an ocean margin of 20% or better in a quarter when Drewry’s Shanghai to Los Angeles rate is under $4,000, or a clean split of profit showing the China service earning well when rates are low. Until then the price sits next to my bull case.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

• Labour. 2,843 of Matson’s 4,170 employees are covered by collective agreements, and its terminal partner SSAT and Matson are members of the Pacific Maritime Association, which negotiates with the West Coast longshore union. A stoppage would hit every West Coast call.²
• Trade policy. Tariffs in April 2025 flattened the 2025 peak season and a US-China deal in October 2025 steadied it. Policy can reverse again, either way.²³
• Fuel and Hawaii’s cost of living. Higher fuel costs held down Ocean margin in the quarter and the Hawaii economy has slowed on energy-related inflation. The fuel surcharge is meant to recover those costs.³
• Shipyard. The ships are built by Philly Shipyard, which is owned by Hanwha. The 10-K lists delays, subcontractor failures in South Korea and labour disputes at the yard among the risks.²
• Safety. A fire, grounding or oil spill at sea can cost more than insurance covers, and Matson keeps part of the risk itself.²
• Insiders. Fifteen insiders sold stock in 2026 and none bought. That alone says little, but a buyer at this price would want to see the first purchase.⁹