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Masco (MAS) Hits 52-Week High: Solid Housing Demand to Aid
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Masco Corporation (MAS - Free Report) touched a new 52-week high of $69.69 on Dec 28, 2021. The stock pulled back to end the trading session at $69.57, up 0.5% from the previous day’s closing price of $69.22. The uptick was probably due to solid housing demand, leading brands, cost-saving initiatives and inorganic moves.
Additionally, solid earnings prospects and a superior return on equity (ROE) have been adding to the positives.
In addition to Masco, TopBuild Corp. (BLD - Free Report) , Installed Building Products, Inc. (IBP - Free Report) , and Simpson Manufacturing Co., Inc. (SSD - Free Report) also achieved their respective 52-week high of $284.07, $141.43, and $138.28 yesterday.
Yet, the company has been grappling with intense inflationary pressure over the last few quarters. Owing to supply chain constraints and material, transportation and labor inflation, its third-quarter earnings declined 6.6% from a year ago. Nonetheless, MAS has been working to recover commodity costs through successfully implementing pricing and cost-productivity actions.
Let’s delve deeper into the factors supporting its growth potential.
Solid Performance of Leading Brands: Masco reported impressive results for third-quarter 2021. Earnings and net sales surpassed the Zacks Consensus Estimate by 13.8% and 4.7%, respectively. Net sales grew 11.1% from the year-ago figure. Strong Decorative Architectural Products and North American Plumbing segments helped it deliver better-than-expected results. Sales in the North American region increased 9% from the prior-year figure and 15% internationally, in local currency.
Upbeat View on Solid Demand: Based on the strong performance for the first three quarters of 2021 and solid demand throughout the business, Masco lifted earnings projection. Adjusted earnings are now projected within $3.67-$3.73 per share, up from the prior expectation of $3.65-$3.75. This indicates 19% growth from the 2020 level.
The company has solid prospects, as is evident from the Zacks Consensus Estimate for 2021 and 2022. Earnings estimates for 2021 have remained stable at $3.73 per share, while that of 2022 has gained 0.5% to $4.22 over the past 60 days. This indicates 19.6% and 13.1% growth, respectively, on a year-over-year basis. MAS is expected to generate 15.4% earnings growth in the next five years. The company’s earnings surpassed analysts’ expectations in the trailing eight quarters.
This leading building products manufacturer has an impressive VGM Score of B, supported by a Value and Growth Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics.
Inorganic Moves: Masco continues to expand its portfolio with acquisitions. In third-quarter 2021, the company’s Delta brand acquired a leading manufacturer of residential steam bath products, namely Steamist, Inc. This acquisition will complement Masco’s strong trade and e-commerce product offerings.
Again in first-quarter 2021, it acquired a 75.1% equity interest in Easy Sanitary Solutions B.V. ("ESS") for approximately $58 million. ESS is a manufacturer of shower channel drains and offers a wide range of products for barrier-free showering as well as bathroom wall niches. Included in the Plumbing Products segment, ESS mainly focuses on innovation and design. The buyout will expand the company’s presence in the sanitary solutions business.
Favorable Housing Backdrop & Cost-Saving Moves: The U.S. housing market is witnessing an impressive comeback on major data points post-COVID-led shutdowns, with home sales rising at a record pace, defying low inventory levels, broad-based public health risks and supply chain woes. October home sales data depicts the true picture of the same.
Masco’s cost-saving initiatives include business consolidations, system implementations, plant closures, branch closures, improvement in the global supply chain and headcount reduction. These initiatives target company-wide annual savings through reduction of corporate expense and simplification of Masco’s organizational structure. Masco remains well positioned to capitalize on the robust demand to drive growth and margin expansion in the near future.
Superior ROE: Masco has a very strong return on equity (ROE) that is indicative of growth potential. The company’s ROE currently stands at 480.1%. This compares favorably with ROE of 9.4% for the industry it belongs to. This indicates efficiency in using shareholders’ funds and its ability to generate profits with minimum capital usage.
A Brief Overview of the Other Stocks
TopBuild currently carries a Zacks Rank #3. This Daytona Beach, FL-based company is an installer and distributor of insulation and other building products to the U.S. construction industry. The company has been benefitting from increased sales volume, solid contribution from acquisitions and pricing at both businesses, defying the labor and material-constrained market.
TopBuild’s shares have gained 40.8% in the past six months. Earnings are expected to rise 46.8% in 2021.
Installed Building also carries a Zacks Rank #3. The company is a leading installer of insulation and complementary building products. it primarily banks on robust pipeline of acquisition opportunities across multiple geographies, products and end markets.
Installed Building’s shares have surged 14.4% in the past six months. Earnings for 2021 are expected to rise 26.7%.
Simpson currently carries a Zacks Rank #3. The company designs, engineer and manufacture high quality wood and concrete building construction products designed to make structures safer and more secure, and that perform at high levels. It has been benefitting from product price increases and key growth initiatives.
Simpson’s shares have surged 61% in the past six months. Earnings for 2021 are expected to rise 28.1%.
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Masco (MAS) Hits 52-Week High: Solid Housing Demand to Aid
Masco Corporation (MAS - Free Report) touched a new 52-week high of $69.69 on Dec 28, 2021. The stock pulled back to end the trading session at $69.57, up 0.5% from the previous day’s closing price of $69.22. The uptick was probably due to solid housing demand, leading brands, cost-saving initiatives and inorganic moves.
Additionally, solid earnings prospects and a superior return on equity (ROE) have been adding to the positives.
In addition to Masco, TopBuild Corp. (BLD - Free Report) , Installed Building Products, Inc. (IBP - Free Report) , and Simpson Manufacturing Co., Inc. (SSD - Free Report) also achieved their respective 52-week high of $284.07, $141.43, and $138.28 yesterday.
Masco — a Zacks Rank #3 (Hold) stock — has gained 19% in the past six months, outperforming the Zacks Building Products - Miscellaneous industry, Zacks Construction sector, and S&P 500 Index’s 5.5%, 11.9%, and 12.5% growth, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Yet, the company has been grappling with intense inflationary pressure over the last few quarters. Owing to supply chain constraints and material, transportation and labor inflation, its third-quarter earnings declined 6.6% from a year ago. Nonetheless, MAS has been working to recover commodity costs through successfully implementing pricing and cost-productivity actions.
Let’s delve deeper into the factors supporting its growth potential.
Solid Performance of Leading Brands: Masco reported impressive results for third-quarter 2021. Earnings and net sales surpassed the Zacks Consensus Estimate by 13.8% and 4.7%, respectively. Net sales grew 11.1% from the year-ago figure. Strong Decorative Architectural Products and North American Plumbing segments helped it deliver better-than-expected results. Sales in the North American region increased 9% from the prior-year figure and 15% internationally, in local currency.
Upbeat View on Solid Demand: Based on the strong performance for the first three quarters of 2021 and solid demand throughout the business, Masco lifted earnings projection. Adjusted earnings are now projected within $3.67-$3.73 per share, up from the prior expectation of $3.65-$3.75. This indicates 19% growth from the 2020 level.
The company has solid prospects, as is evident from the Zacks Consensus Estimate for 2021 and 2022. Earnings estimates for 2021 have remained stable at $3.73 per share, while that of 2022 has gained 0.5% to $4.22 over the past 60 days. This indicates 19.6% and 13.1% growth, respectively, on a year-over-year basis. MAS is expected to generate 15.4% earnings growth in the next five years. The company’s earnings surpassed analysts’ expectations in the trailing eight quarters.
This leading building products manufacturer has an impressive VGM Score of B, supported by a Value and Growth Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics.
Inorganic Moves: Masco continues to expand its portfolio with acquisitions. In third-quarter 2021, the company’s Delta brand acquired a leading manufacturer of residential steam bath products, namely Steamist, Inc. This acquisition will complement Masco’s strong trade and e-commerce product offerings.
Again in first-quarter 2021, it acquired a 75.1% equity interest in Easy Sanitary Solutions B.V. ("ESS") for approximately $58 million. ESS is a manufacturer of shower channel drains and offers a wide range of products for barrier-free showering as well as bathroom wall niches. Included in the Plumbing Products segment, ESS mainly focuses on innovation and design. The buyout will expand the company’s presence in the sanitary solutions business.
Favorable Housing Backdrop & Cost-Saving Moves: The U.S. housing market is witnessing an impressive comeback on major data points post-COVID-led shutdowns, with home sales rising at a record pace, defying low inventory levels, broad-based public health risks and supply chain woes. October home sales data depicts the true picture of the same.
Masco’s cost-saving initiatives include business consolidations, system implementations, plant closures, branch closures, improvement in the global supply chain and headcount reduction. These initiatives target company-wide annual savings through reduction of corporate expense and simplification of Masco’s organizational structure. Masco remains well positioned to capitalize on the robust demand to drive growth and margin expansion in the near future.
Superior ROE: Masco has a very strong return on equity (ROE) that is indicative of growth potential. The company’s ROE currently stands at 480.1%. This compares favorably with ROE of 9.4% for the industry it belongs to. This indicates efficiency in using shareholders’ funds and its ability to generate profits with minimum capital usage.
A Brief Overview of the Other Stocks
TopBuild currently carries a Zacks Rank #3. This Daytona Beach, FL-based company is an installer and distributor of insulation and other building products to the U.S. construction industry. The company has been benefitting from increased sales volume, solid contribution from acquisitions and pricing at both businesses, defying the labor and material-constrained market.
TopBuild’s shares have gained 40.8% in the past six months. Earnings are expected to rise 46.8% in 2021.
Installed Building also carries a Zacks Rank #3. The company is a leading installer of insulation and complementary building products. it primarily banks on robust pipeline of acquisition opportunities across multiple geographies, products and end markets.
Installed Building’s shares have surged 14.4% in the past six months. Earnings for 2021 are expected to rise 26.7%.
Simpson currently carries a Zacks Rank #3. The company designs, engineer and manufacture high quality wood and concrete building construction products designed to make structures safer and more secure, and that perform at high levels. It has been benefitting from product price increases and key growth initiatives.
Simpson’s shares have surged 61% in the past six months. Earnings for 2021 are expected to rise 28.1%.