Back to top

Masco (MAS) Q2 Earnings Miss, Revenues Surpass Estimates

Read MoreHide Full Article

Masco Corporation’s (MAS - Free Report) reported mixed second-quarter 2018 financial numbers, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Notably, the company’s bottom line missed the consensus mark for the second straight quarter.

Growth in the quarter was driven by strong performance in the Plumbing, Decorative Architectural and Cabinetry Products business.

Earnings & Revenues

In the reported quarter, adjusted earnings per share came in at 75 cents, which missed the Zacks Consensus Estimate by a penny. However, the bottom line increased 21% on a year- over-year basis.

Net revenues of $2,297 million surpassed analysts’ expectation of $2,290 million by 0.3%. The top line also grew 11% year over year on the back of strong sales from Plumbing, Decorative Architectural and Cabinetry Products. Moreover, increased volume as well as pricing actions boosted the company’s quarterly results.

Margins

Adjusted gross profit grew 3.5% to $772 million, while adjusted gross margin contracted 250 basis points (bps) to 33.6%.

Adjusted operating profit rose 2.2% to $380 million. Adjusted operating margin contracted 150 bps to 16.5%.

As a percentage of net revenues, selling, general and administrative expenses were 17.1%, less than 18.1% reported in the prior-year quarter.

Masco Corporation Price, Consensus and EPS Surprise

Segmental Analysis

Plumbing Products: The segment recorded revenues of $1,032 million, reflecting an increase of 9%. Excluding the impact of foreign currency translation, revenues increased 6% backed by growth in North America and international markets.

Adjusted operating margin of 19% declined 210 bps year over year.

Decorative Architectural Products: Segmental revenues summed $806 million, up 22% year-over-year, The upside is attributable to the Kichler acquisition as well as increase in revenues of paints and other coatings products and builders’ hardware.

Adjusted operating margin fell 200 bps to 20.5%.

Cabinets and Related Products: Segmental revenues totaled $268 million, which increased 7% year over year. The improvement was owing to solid growth in the repair and remodel business, partially overshadowed by the divestiture of Moores.

Adjusted operating margin was 12.3% in the quarter compared with 12.4% reported in the year-ago quarter.

Windows and Other Specialty Products: Segmental revenues amounted to $191 million, down 7% year over year.

Operating margin was 4.2% in the quarter compared with 8.8% a year ago.

Financials

Masco ended the quarter with cash and cash investments of $384 million, as of Jun 30, 2018, compared with $1.2 billion as of Dec 31, 2017.

Guidance

For 2018, the company now expects adjusted earnings per share in the $2.48-$2.55 band compared with earlier guided range of $2.48-$2.63 per share.

Masco carries a Zacks Rank #4 (Sell).

Stocks to Consider

Better-ranked stocks in the same space include Armstrong World Industries, Inc. (AWI - Free Report) , Construction Partners, Inc. (ROAD - Free Report) and Foundation Building Materials, Inc. (FBM - Free Report) . All these stocks carry a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Armstrong World Industries has an impressive long-term earnings growth rate of 17.3%.

Construction Partners has long-term earnings growth rate of 10%.

Foundation Building Materials reported better-than-expected earnings in two of the trailing three quarters.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like

Published in