Alexander & BaldwinALEX

Morningstar Rating

Stock Research and Analysis

by David Manger

Alexander & Baldwin should continue to benefit from its strong market share along protected shipping routes and further development of its real estate holdings. However, given that marine shipping is a commodity service and the firm's real estate Read more

Bulls Say

A&B can pass on rising fuel costs to customers through price increases at the end of each quarter.

By burning sugar cane byproducts, the firm generates electricity for its own use and public sale, reducing costs and adding revenue.

A&B is the fourth-largest landowner in Hawaii, owning nearly 90,000 acres.

Penetration into Chinese shipping markets adds a back leg to the firm's shipping routes. This should increase vessel-utilization levels compared with when vessels would return directly to the western United States from Hawaii with much smaller cargos. Read more

Bears Say

Forecasting the timing and price of A&B's land sales is very difficult. If demand remains at depressed levels, the firm may end up selling land at prices lower than originally anticipated.

The steps required to entitle and process real estate sales in Hawaii is a lengthy and costly process. Without proper management, costs can chip away at potential profits.

Similar to competitor Horizon Lines, A&B is being investigated by the Department of Justice regarding price-fixing allegations. Most of the inquiries center around Puerto Rican shipping lanes, where Horizon Lines, and not A&B, operates. As A&B's primary routes are more regulated, we don't expect any violations to surface, but the firm may still face costly legal fees. Read more

Strategy

A&B has expanded its transportation business by adding a shipping route between China and the western U.S. Through an expedited service along the route, the firm typically obtains premium rates from Read more

Management

CEO and chairman Allen Doane took the reins at A&B in 1998. In recent years he has led the firm's penetration into Chinese shipping markets. Although the international shipping routes pose greater competition compared with the firm's domestic routes, Read more

Profile

Based in Hawaii, Alexander & Baldwin operates three diverse segments: transportation, real estate, and agriculture. Matson, a wholly owned subsidiary, accounts for the Read more

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