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Why Is Masco (MAS) Up 10.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Masco (MAS - Free Report) . Shares have added about 10.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Masco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Masco Q3 Earnings & Sales Lag Estimates, 2022 View Down
Masco Corporation reported results for third-quarter 2022, wherein both earnings and revenues missed the Zacks Consensus Estimate. The company has been grappling with lower demand, higher operational costs and additional foreign currency headwinds.
Inside the Headlines
Masco reported adjusted earnings of 98 cents per share, which lagged the consensus mark of $1.07 by 8.4%. Adjusted earnings declined by a cent from the year ago.
Net sales of $2,204 million missed the consensus estimate of $2,264 million by 2.7% but remained flat from the prior-year quarter. Net sales increased 3% year over year in local currency, excluding acquisitions and divestitures. Sales in the North American region increased 3% from the prior-year quarter’s figure and 5% internationally in local currency.
Segmental Analysis
Plumbing Products: Sales in the segment remained flat year over year to $1,324 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 5% year over year. The operating margin contracted 210 basis points (bps) year over year to 16.6% due to lower volumes, higher operational costs and currency. Adjusted EBITDA declined 10.9% year over year.
Decorative Architectural Products: The segment reported sales of $880 million, up 1% from the prior-year period’s number. The operating margin declined 180 bps to 17.2% due to lower volumes and higher freight and material costs, partially offset by higher net selling prices. Adjusted EBITDA declined 8.6% year over year.
Margins Performance
Adjusted gross margin contracted 270 bps from the prior-year level to 31.5%. Selling, general and administrative expenses — as a percentage of net sales — declined to 15.6% from the year-ago quarter’s 16.7%.
Adjusted operating margin contracted 160 bps on a year-over-year basis to 15.9%. Adjusted EBITDA also fell 8.6% year over year to $385 million.
Financials
As of Sep 30, 2022, Masco had cash and cash investments of $464 million compared with $926 million recorded at 2021-end.
Long-term debt was $2.946 billion, slightly down from $2.949 billion at 2021-end. Net cash for operating activities was $520 million for the first nine months of 2022 compared with $595 million in the year-ago period.
2022 Projections Lowered
The company expects lower market demand, elevated operational costs and additional foreign currency headwinds in the fourth quarter due to the evolving market conditions.
Owing to these challenges, the company has lowered full-year adjusted earnings per share guidance to $3.70 - $3.80 per share from $$4.11-$4.25 expected earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -32.6% due to these changes.
VGM Scores
At this time, Masco has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Masco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Masco is part of the Zacks Building Products - Miscellaneous industry. Over the past month, Armstrong World Industries (AWI - Free Report) , a stock from the same industry, has gained 2.6%. The company reported its results for the quarter ended September 2022 more than a month ago.
Armstrong World Industries reported revenues of $325 million in the last reported quarter, representing a year-over-year change of +11.2%. EPS of $1.36 for the same period compares with $1.17 a year ago.
Armstrong World Industries is expected to post earnings of $1.13 per share for the current quarter, representing a year-over-year change of +3.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -11.4%.
Armstrong World Industries has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Masco (MAS) Up 10.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Masco (MAS - Free Report) . Shares have added about 10.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Masco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Masco Q3 Earnings & Sales Lag Estimates, 2022 View Down
Masco Corporation reported results for third-quarter 2022, wherein both earnings and revenues missed the Zacks Consensus Estimate. The company has been grappling with lower demand, higher operational costs and additional foreign currency headwinds.
Inside the Headlines
Masco reported adjusted earnings of 98 cents per share, which lagged the consensus mark of $1.07 by 8.4%. Adjusted earnings declined by a cent from the year ago.
Net sales of $2,204 million missed the consensus estimate of $2,264 million by 2.7% but remained flat from the prior-year quarter. Net sales increased 3% year over year in local currency, excluding acquisitions and divestitures. Sales in the North American region increased 3% from the prior-year quarter’s figure and 5% internationally in local currency.
Segmental Analysis
Plumbing Products: Sales in the segment remained flat year over year to $1,324 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 5% year over year. The operating margin contracted 210 basis points (bps) year over year to 16.6% due to lower volumes, higher operational costs and currency. Adjusted EBITDA declined 10.9% year over year.
Decorative Architectural Products: The segment reported sales of $880 million, up 1% from the prior-year period’s number. The operating margin declined 180 bps to 17.2% due to lower volumes and higher freight and material costs, partially offset by higher net selling prices. Adjusted EBITDA declined 8.6% year over year.
Margins Performance
Adjusted gross margin contracted 270 bps from the prior-year level to 31.5%. Selling, general and administrative expenses — as a percentage of net sales — declined to 15.6% from the year-ago quarter’s 16.7%.
Adjusted operating margin contracted 160 bps on a year-over-year basis to 15.9%. Adjusted EBITDA also fell 8.6% year over year to $385 million.
Financials
As of Sep 30, 2022, Masco had cash and cash investments of $464 million compared with $926 million recorded at 2021-end.
Long-term debt was $2.946 billion, slightly down from $2.949 billion at 2021-end. Net cash for operating activities was $520 million for the first nine months of 2022 compared with $595 million in the year-ago period.
2022 Projections Lowered
The company expects lower market demand, elevated operational costs and additional foreign currency headwinds in the fourth quarter due to the evolving market conditions.
Owing to these challenges, the company has lowered full-year adjusted earnings per share guidance to $3.70 - $3.80 per share from $$4.11-$4.25 expected earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -32.6% due to these changes.
VGM Scores
At this time, Masco has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Masco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Masco is part of the Zacks Building Products - Miscellaneous industry. Over the past month, Armstrong World Industries (AWI - Free Report) , a stock from the same industry, has gained 2.6%. The company reported its results for the quarter ended September 2022 more than a month ago.
Armstrong World Industries reported revenues of $325 million in the last reported quarter, representing a year-over-year change of +11.2%. EPS of $1.36 for the same period compares with $1.17 a year ago.
Armstrong World Industries is expected to post earnings of $1.13 per share for the current quarter, representing a year-over-year change of +3.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -11.4%.
Armstrong World Industries has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.