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


Masco's earnings of $0.32 per share in the second quarter of 2014 beat the Zacks Consensus Estimate by 14.3% and rose 39.0% year over year, owing to strong margins and revenue. Masco's net sales of $2.26 billion were in line with the Consensus mark, however grew 5.1% year over year owing to successful new products and program launches. North American sales and profitability increased due to improvement in new home construction activity. International sales rose due to improvement in Europe and strong performance by international plumbing. Masco expects new home construction and repair and remodel activity to improve in 2014, which will boost the demand for the company's products and services. However, the cabinet business remained soft during the quarter. Masco expects the cabinet segment to remain soft in the upcoming quarters as the consumers continue to defer big ticket expenses. Despite the near-term weakness, we have faith in the company's strong fundamentals. We, therefore, maintain our Neutral recommendation on the stock.


Headquartered in Taylor, ML, 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 the consumer.

Approximately 80% of the company's sales are 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 solution. 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.

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 hardwares 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

Referenced Stocks: MAS

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