It has been about a month since the last earnings report for Masco (MAS Quick QuoteMAS - Free Report) . Shares have added about 14.1% 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 its most recent earnings report in order to get a better handle on the important drivers.

Masco Q1 Earnings & Revenues Top Estimates, Margins Up

Masco Corporation’s first-quarter 2020 earnings and revenues handily beat the Zacks Consensus Estimate and improved year over year, courtesy of strong contributions of North American plumbing products as well as paint and other coatings products.

Inside the Headlines

Masco reported adjusted earnings of 46 cents per share, beating the consensus mark of 36 cents by 27.8%. Moreover, the metric increased 24.3% from the year-ago figure.

Net sales of $1,581 million topped analysts’ expectation of $1,521 million by 3.6% and grew 4% from the year-ago figure of $1,531 million. Notably, the metric grew 5% year over year in local currency.

In local currency, sales in the North American region rose 8% from the prior-year period but fell 3% internationally.

Segmental Analysis

Plumbing Products: Sales in the segment inched up 2% year over year to $955 million, driven by 7% sales growth in North America. In local currency, segment’s sales grew 3% year over year. Adjusted operating margin expanded 30 basis points (bps) year over year to 16.6%. Adjusted EBITDA improved 4.1% year over year to $179 million.

Decorative Architectural Products: The segment reported sales of $626 million, up 9% from the prior-year period, driven by growth in paints and other coating products. Adjusted operating margin increased 100 bps to 15.3%. Adjusted EBITDA grew 16.3% from the prior-year period to $107 million.

Margins Performance

Adjusted gross margin came in at 34.8%, which expanded 30 bps from the prior year. Selling, general and administrative expenses — as a percentage of net sales — were down 50 bps from the year-ago figure.

Adjusted operating margin expanded 80 bps on a year-over-year basis to 14.4%. Adjusted EBITDA increased 10.1% year over year to $261 million.

Financials

As of Mar 31, 2020, the company had cash and cash investments of $767 million compared with $697 million at 2019-end. At the quarter-end, long-term debt was $2.77 billion, on par with 2019-end level. Net cash used for operating activities was $92 million in the first quarter compared with $131 million a year ago. It returned $639 million to shareholders through share repurchases and dividends. Liquidity at the end of the first quarter was $1.767 billion, including full availability on $1 billion revolving credit facility.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted -23.49% due to these changes.

VGM Scores

Currently, Masco has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Masco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.