Masco Corporation (MAS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
In line with the Zacks Consensus Estimate, Masco's third quarter 2014 earnings of $0.31 per share rose 15% year over year, driven by strong margins and improved revenues. Sales of $2.23 billion missed the Zacks Consensus mark by 1.8%, but grew 4% year over year on the back of successful new product and program launches. Strength in the plumbing wholesale channel, consistent increase across all channels of the Installation segment, and solid momentum in the North American and international window businesses led the top-line growth. Net sales of the Cabinet segment increased year over year during the quarter after declining in the past few quarters. Overall, we are encouraged by Masco's continued focus on product innovation and cost improvements. However, further consistency in Cabinet segment improvement is yet to be seen. We, therefore, maintain our Neutral recommendation on the stock.

Overview:

Headquartered in Taylor, MI, Masco Corporation (MAS) manufactures, sells and installs home improvement and building products. These products are sold through mass merchandisers, hardware stores, home centers, homebuilders, distributors and other outlets for consumers and contractors, and direct to consumers.

Approximately 80% of the company's sales is generated from operations in North America, primarily in the U.S. Around 20% of the company's sales is generated outside the U.S., mainly in Europe. The company's largest customer is The Home Depot Inc.

Masco operates through five business segments: Plumbing Products, Cabinets and Related Products, Installation and Other Services, Decorative Architectural Products and Other Specialty Products.


Plumbing Products (38% of 2013 revenues): The segment manufactures and markets an array of faucets, bathing and showering devices, valves, bathtubs, spas and toilets (launched in 2012).

Cabinets and Related Products (13%): The segment manufactures and sells stock and semi-custom, assembled cabinetry for kitchen, bath, storage, home office and home entertainment applications in both North America and Europe. In North America, the company also sells kitchen countertops, integrated bathroom vanity and countertop solutions. In Europe, it also sells ready-to-assemble cabinetry for kitchen.

Installation and Other Services (1%): In this segment, Masco sells installed building products, installed gutters, after-paint products, fireplaces and garage doors. The company also distributes building products in the new home construction market. The company, however, plans to divest this business into a separate independent company.

Decorative Architectural Products (24%): The segment manufactures architectural coatings, including paints, primers, specialty paint products, stains and waterproofing products. These products are sold in the U.S., Canada, China, Mexico and South America. The company's Behr branded products are principally sold through The Home Depot. The segment also manufactures Liberty and Brainerd branded cabinets, doors, windows and other hardware which are sold to home centers, retailers, wholesalers and original equipment manufacturers.

Other Specialty Products (8%): The segment manufactures a full range of windows and doors, manual and electric staple gun tackers, staples and other fastening tools.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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