On Mar 14, 2014, we issued an updated research report on
The home improvement products maker reported decent
fourth-quarter fiscal 2013 results on Feb 11.
Despite missing the Zacks Consensus Estimate, Masco's
fourth-quarter earnings of 15 cents per share increased a massive
150% year over year. Strong revenues, solid margin expansion,
cost controls and better operating leverage led to the earnings
Moreover, revenues went up 9.1% year over year while beating
the Zacks Consensus Estimate, despite difficult year-ago
comparisons, driven by volume growth.
Volumes benefited from new products/programs launches;
increased new home construction activity and improvement in
repair/remodel activity in North America; and increased outside
U.S. sales due to improvement in Europe. In fact, in the second
half of 2013, the company saw some traction in consumer spending
on large ticket home improvementsafter struggling for the past
Gross margins improved 100 basis points (bps) while operating
margins grew 210 bps helped by strong revenues and solid cost
controls. Most encouragingly, Installation and Cabinetry segments
were profitable in 2013 after underperforming in 2012 driven by
the company's strategic initiatives and gaining from the housing
We are encouraged by Masco's continued focus on product
innovation and cost improvements. The company is also divesting
its less profitable and underperforming assets to focus more on
its core areas. During 2014, the company expects further momentum
in new home construction, and repairs and remodel activity in
North America and international markets.
Positive trends in new home construction activity from 2012
and improved repair/remodeling spending more recently boosted
demand for Masco's home improvement products like Delta faucets,
Behr paint and Milgard windows in the last few quarters. However,
with the U.S. residential activity growth slowing down in the
second half of 2013, the demand for Masco's products could be
hurt in future quarters.
Other Stocks to Consider
Masco carries a Zacks Rank #3 (Hold). Other better-ranked
stocks in the building/construction sector include
Gibraltar Industries, Inc.
). While Gibraltar Industries enjoys a Zacks Rank #1 (Strong
Buy), Wolseley and USGcarry a Zacks Rank #2 (Buy).
MASCO (MAS): Free Stock Analysis Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis
USG CORP (USG): Free Stock Analysis Report
WOLSELEY -ADR (WOSYY): Get Free Report
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