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Masco's Kichler Lighting Sale Unlocks Value: Stock to Gain?
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Masco Corporation (MAS - Free Report) has taken a decisive step toward sharpening its focus on core operations by entering into a definitive agreement to sell its Kichler Lighting business to an affiliate of Kingswood Capital Management for approximately $125 million. The sale is expected to be completed by the end of the year, pending customary closing conditions and regulatory approvals.
Shares of Masco lost 1.6% during the trading session on Sept. 3, 2024.
How Will Masco Benefit From the Kichler Lighting Sale
This divestiture marks a significant move for Masco as it streamlines its portfolio. Kichler Lighting, headquartered in Solon, OH, provides decorative residential and light commercial lighting products, including ceiling fans and LED lighting systems. While Kichler Lighting underwent operational improvements under Masco’s ownership, the company believes that a more focused lighting-centric organization — like Kingswood, which owns Progress Lighting — can propel it to its next phase of growth.
This divestiture presents a clear opportunity for Masco to focus on its core strengths in home improvement and building products and further solidify its leadership in key categories such as plumbing, coatings, and hardware. Masco's portfolio already includes industry-leading brands such as Behr paint and Delta faucets, and the sale of Kichler Lighting allows the company to direct more resources toward these high-growth areas. Additionally, the $125 million infusion from the sale can be reinvested into Masco’s more profitable segments, further boosting operational efficiency and profitability.
This move to refocus on key brands, paired with the financial flexibility gained from the sale, is likely to benefit Masco’s stock performance in the coming quarters, positioning the company for long-term growth in the home improvement sector with a more streamlined business model.
MAS’ Stock Price Performance
Masco shares have gained 15.6%% in the past three months, outperforming the Zacks Building Products – Miscellaneous industry’s 7.5% rise and the broader Zacks Construction sector’s 9% increase. It has also fared well compared to the S&P 500’s rise of 5.1%.
Image Source: Zacks Investment Research
Although this home improvement and building products manufacturer has been grappling with weak demand and high expenses, its diligent cost-saving efforts, disciplined pricing, and operational efficiencies will help the company continue to drive operating margin improvement and earnings per share (EPS) growth in 2024. The latest sale marks its focus on its core business, which was again reflected by the acquisition of Sauna360 in the third quarter of 2023.
Sauna360 offers a diverse product portfolio, including traditional, infrared, and wood-burning saunas, as well as steam showers. This acquisition has been integrated into Masco's Plumbing Products segment.
The Zacks Consensus Estimate for 2024 EPS has increased to $4.11 over the past 30 days. The estimated figure indicates 6.5% year-over-year growth for 2024. It also has a favorable VGM Score of A, making it a potentially interesting investment opportunity.
MAS’ Zacks Rank and Key Picks
Masco currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Construction sector have been discussed below.
Frontdoor, Inc. (FTDR - Free Report) : Based in Memphis, TN, this company provides home warranties in the United States. Shares of FTDR have gained 27% over the past three months.
FTDR flaunts a Zacks Rank #1 (Strong Buy). FTDR has seen an upward estimate revision of 1.1% for 2024 earnings over the past 30 days to $2.73 per share. The estimated figure indicates 18.7% year-over-year growth for 2024. You can see the complete list of today’s Zacks #1 Rank stocks here.
Latham Group, Inc. (SWIM - Free Report) : Based in Latham, NY, the company stands as the leading designer, manufacturer, and marketer of in-ground residential swimming pools and pool accessories. Shares of SWIM have gained 57.1% over the past three months.
SWIM presently sports a Zacks Rank #1. This company surpassed earnings estimates in the last reported quarter by 275%. SWIM has seen an upward estimate revision of 2024 earnings to 13 cents from break-even over the past 30 days. The company’s earnings for 2024 are expected to increase 750%.
Armstrong World Industries, Inc. (AWI - Free Report) : Based in Lancaster, PA, Armstrong World is a leading global manufacturer of ceiling systems primarily for commercial, institutional, and residential building construction and renovation. Shares of AWI have gained 6.9% over the past three months.
AWI presently carries a Zacks Rank #2 (Buy). AWI has seen an upward estimate revision of 3.1% for 2024 earnings over the past 60 days to $6.07 per share. The company’s earnings for 2024 are expected to increase 14.1%.
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Masco's Kichler Lighting Sale Unlocks Value: Stock to Gain?
Masco Corporation (MAS - Free Report) has taken a decisive step toward sharpening its focus on core operations by entering into a definitive agreement to sell its Kichler Lighting business to an affiliate of Kingswood Capital Management for approximately $125 million. The sale is expected to be completed by the end of the year, pending customary closing conditions and regulatory approvals.
Shares of Masco lost 1.6% during the trading session on Sept. 3, 2024.
How Will Masco Benefit From the Kichler Lighting Sale
This divestiture marks a significant move for Masco as it streamlines its portfolio. Kichler Lighting, headquartered in Solon, OH, provides decorative residential and light commercial lighting products, including ceiling fans and LED lighting systems. While Kichler Lighting underwent operational improvements under Masco’s ownership, the company believes that a more focused lighting-centric organization — like Kingswood, which owns Progress Lighting — can propel it to its next phase of growth.
This divestiture presents a clear opportunity for Masco to focus on its core strengths in home improvement and building products and further solidify its leadership in key categories such as plumbing, coatings, and hardware. Masco's portfolio already includes industry-leading brands such as Behr paint and Delta faucets, and the sale of Kichler Lighting allows the company to direct more resources toward these high-growth areas. Additionally, the $125 million infusion from the sale can be reinvested into Masco’s more profitable segments, further boosting operational efficiency and profitability.
This move to refocus on key brands, paired with the financial flexibility gained from the sale, is likely to benefit Masco’s stock performance in the coming quarters, positioning the company for long-term growth in the home improvement sector with a more streamlined business model.
MAS’ Stock Price Performance
Masco shares have gained 15.6%% in the past three months, outperforming the Zacks Building Products – Miscellaneous industry’s 7.5% rise and the broader Zacks Construction sector’s 9% increase. It has also fared well compared to the S&P 500’s rise of 5.1%.
Image Source: Zacks Investment Research
Although this home improvement and building products manufacturer has been grappling with weak demand and high expenses, its diligent cost-saving efforts, disciplined pricing, and operational efficiencies will help the company continue to drive operating margin improvement and earnings per share (EPS) growth in 2024. The latest sale marks its focus on its core business, which was again reflected by the acquisition of Sauna360 in the third quarter of 2023.
Sauna360 offers a diverse product portfolio, including traditional, infrared, and wood-burning saunas, as well as steam showers. This acquisition has been integrated into Masco's Plumbing Products segment.
The Zacks Consensus Estimate for 2024 EPS has increased to $4.11 over the past 30 days. The estimated figure indicates 6.5% year-over-year growth for 2024. It also has a favorable VGM Score of A, making it a potentially interesting investment opportunity.
MAS’ Zacks Rank and Key Picks
Masco currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Construction sector have been discussed below.
Frontdoor, Inc. (FTDR - Free Report) : Based in Memphis, TN, this company provides home warranties in the United States. Shares of FTDR have gained 27% over the past three months.
FTDR flaunts a Zacks Rank #1 (Strong Buy). FTDR has seen an upward estimate revision of 1.1% for 2024 earnings over the past 30 days to $2.73 per share. The estimated figure indicates 18.7% year-over-year growth for 2024. You can see the complete list of today’s Zacks #1 Rank stocks here.
Latham Group, Inc. (SWIM - Free Report) : Based in Latham, NY, the company stands as the leading designer, manufacturer, and marketer of in-ground residential swimming pools and pool accessories. Shares of SWIM have gained 57.1% over the past three months.
SWIM presently sports a Zacks Rank #1. This company surpassed earnings estimates in the last reported quarter by 275%. SWIM has seen an upward estimate revision of 2024 earnings to 13 cents from break-even over the past 30 days. The company’s earnings for 2024 are expected to increase 750%.
Armstrong World Industries, Inc. (AWI - Free Report) : Based in Lancaster, PA, Armstrong World is a leading global manufacturer of ceiling systems primarily for commercial, institutional, and residential building construction and renovation. Shares of AWI have gained 6.9% over the past three months.
AWI presently carries a Zacks Rank #2 (Buy). AWI has seen an upward estimate revision of 3.1% for 2024 earnings over the past 60 days to $6.07 per share. The company’s earnings for 2024 are expected to increase 14.1%.