Masco Corporation (MAS - Free Report) is set to report second-quarter fiscal 2014 results on Jul 28, after market closes. Last quarter, it posted a negative earnings surprise of 16.67%.
The company has missed estimates in three of the four trailing quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
After a strong 2013, Masco began 2014 on a softer note as North American sales and profitability were impacted by rough weather and slowdown in construction activity. Following the slowdown in U.S. residential activity in the second half of 2013, demand for Masco’s products have remained soft. This trend is expected to continue in the upcoming quarter.
At the first-quarter conference call, management announced that April sales were up only in low-to-mid single-digits due to tough comparisons – indicating that sales might fail to pickup in the second quarter despite improvement in weather conditions.
However, the company has been witnessing strong international sales, driven by product launches and strong performance by international plumbing and window businesses.
Our proven model does not conclusively show that Masco is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Negative Zacks ESP: Masco’s Earnings ESP is -3.57%.
Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the building construction/building materials sector that have both a positive Earnings ESP and a favorable Zacks Rank are:
Martin Marietta Materials Inc. (MLM - Free Report) , with an Earnings ESP of +2.44% and a Zacks Rank #2 (Buy).
United Rentals, Inc. (URI - Free Report) , with an Earnings ESP of +2.38% and a Zacks Rank #2.
CEMEX, S.A.B. de C.V. (CX - Free Report) , with an Earnings ESP of +100.00% and a Zacks Rank #3 (Hold).