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Why Is Masco (MAS) Up 2.6% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Masco Corporation (MAS - Free Report) . Shares have added about 2.6% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Masco’s adjusted earnings of $0.33 per share in the fourth quarter of 2016 missed the Zacks Consensus Estimate of $0.34 by 2.9%. Adjusted earnings increased 14% year over year.
Masco’s net sales of $1.76 billion surpassed the Zacks Consensus Estimate of $1.75 billion by 0.6%. Revenues also grew 3% year over year on the back of strong sales growth in Plumbing and Decorative Architectural Products. Organic revenues increased 4% year over year.
North American sales increased 3% year over year to $1.39 billion. International sales inched up 1% (up 8% in local currency) to $370 million.
SG&A expenses, as a percentage of sales, increased by 170 basis points this quarter, due to increased medical insurance costs by around $10 million and planned strategic investments.
Margins
Adjusted gross profit grew 7.6% to $577 million while adjusted gross margin improved 150 basis points to 32.8%.
Adjusted operating profit inched up 0.9% to $221 million.
Adjusted operating margin decreased 20 basis points (bps) to 12.6%. As a percentage of net sales, selling, general and administrative expenses (adjusted) increased 170 bps to 20.2%.
Adjusted operating margin rose 70 bps to 15.5% in North America and were down 150 bps to10.5% in international markets.
Segmental Analysis
Cabinets and Related Products: Segmental revenues of $234 million declined 8% year over year due to the exit of the company from lower margin business in the builder channel, which was partially compensated by growth in the retail and dealer channels.
The company reported adjusted operating profits of $19 million (in line with the year-ago figure). Adjusted operating margin was 8.1% in the quarter, up 30 bps from the year-ago quarter.
Plumbing Products: The segment recorded revenues of $891 million, up 5%. Excluding the impact of foreign currency translation, revenues increased 7% on growth in North America and internationally.
Adjusted operating margin of 17.2% increased 150 bps year over year.
Decorative Architectural Products: Segmental revenues of $443 million were up 5% as strong volume growth was partially offset by promotional activity.
Operating margin decreased 330 bps to 16.9%.
Windows and Other Specialty Products: Segmental revenues totaled $191 million, down 2% year over year. Excluding the impact of foreign currency translation, net sales increased 2%, led by both the international and North American windows businesses.
2016 Results
Masco’s adjusted earnings of $1.51 per share in 2016 missed the Zacks Consensus Estimate of $1.54 by 1.9%. Adjusted earnings increased 27% year over year.
Masco’s net sales of $7.36 billion surpassed the Zacks Consensus Estimate of $7.35 billion by 0.1%. Revenues, however, grew 3% year over year.
Financials
Masco ended the quarter with cash and cash investments of $0.99 billion, as of Dec 31, 2016, compared with $1.45 billion as of Dec 31, 2015.
Free cash flow was $535 million in 2016. The company repurchased $459 million of shares, thus generating solid returns for shareholders.
2017 Guidance
The company expects to exceed its 2017 earnings per share target of $1.80 announced in 2015.
Masco estimates currency headwinds to impact its 2017 sales by approximately $100 million.
The company’s decision to exit builder direct business and retail kitchen countertop business is expected to be completed by the end of the second quarter of 2017. Masco believes this exit will impact sales by approximately $20 million in the first quarter of 2017 and by approximately $5 million in the second quarter of 2017.
Masco anticipates approximately $5 million in launch costs in the first quarter of 2017 related to the introduction of new products.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Masco's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of' A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is Masco (MAS) Up 2.6% Since the Last Earnings Report?
A month has gone by since the last earnings report for Masco Corporation (MAS - Free Report) . Shares have added about 2.6% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Masco (MAS - Free Report) Misses on Q4 Earnings
Masco’s adjusted earnings of $0.33 per share in the fourth quarter of 2016 missed the Zacks Consensus Estimate of $0.34 by 2.9%. Adjusted earnings increased 14% year over year.
Masco’s net sales of $1.76 billion surpassed the Zacks Consensus Estimate of $1.75 billion by 0.6%. Revenues also grew 3% year over year on the back of strong sales growth in Plumbing and Decorative Architectural Products. Organic revenues increased 4% year over year.
North American sales increased 3% year over year to $1.39 billion. International sales inched up 1% (up 8% in local currency) to $370 million.
SG&A expenses, as a percentage of sales, increased by 170 basis points this quarter, due to increased medical insurance costs by around $10 million and planned strategic investments.
Margins
Adjusted gross profit grew 7.6% to $577 million while adjusted gross margin improved 150 basis points to 32.8%.
Adjusted operating profit inched up 0.9% to $221 million.
Adjusted operating margin decreased 20 basis points (bps) to 12.6%. As a percentage of net sales, selling, general and administrative expenses (adjusted) increased 170 bps to 20.2%.
Adjusted operating margin rose 70 bps to 15.5% in North America and were down 150 bps to10.5% in international markets.
Segmental Analysis
Cabinets and Related Products: Segmental revenues of $234 million declined 8% year over year due to the exit of the company from lower margin business in the builder channel, which was partially compensated by growth in the retail and dealer channels.
The company reported adjusted operating profits of $19 million (in line with the year-ago figure). Adjusted operating margin was 8.1% in the quarter, up 30 bps from the year-ago quarter.
Plumbing Products: The segment recorded revenues of $891 million, up 5%. Excluding the impact of foreign currency translation, revenues increased 7% on growth in North America and internationally.
Adjusted operating margin of 17.2% increased 150 bps year over year.
Decorative Architectural Products: Segmental revenues of $443 million were up 5% as strong volume growth was partially offset by promotional activity.
Operating margin decreased 330 bps to 16.9%.
Windows and Other Specialty Products: Segmental revenues totaled $191 million, down 2% year over year. Excluding the impact of foreign currency translation, net sales increased 2%, led by both the international and North American windows businesses.
2016 Results
Masco’s adjusted earnings of $1.51 per share in 2016 missed the Zacks Consensus Estimate of $1.54 by 1.9%. Adjusted earnings increased 27% year over year.
Masco’s net sales of $7.36 billion surpassed the Zacks Consensus Estimate of $7.35 billion by 0.1%. Revenues, however, grew 3% year over year.
Financials
Masco ended the quarter with cash and cash investments of $0.99 billion, as of Dec 31, 2016, compared with $1.45 billion as of Dec 31, 2015.
Free cash flow was $535 million in 2016. The company repurchased $459 million of shares, thus generating solid returns for shareholders.
2017 Guidance
The company expects to exceed its 2017 earnings per share target of $1.80 announced in 2015.
Masco estimates currency headwinds to impact its 2017 sales by approximately $100 million.
The company’s decision to exit builder direct business and retail kitchen countertop business is expected to be completed by the end of the second quarter of 2017. Masco believes this exit will impact sales by approximately $20 million in the first quarter of 2017 and by approximately $5 million in the second quarter of 2017.
Masco anticipates approximately $5 million in launch costs in the first quarter of 2017 related to the introduction of new products.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Masco Corporation Price and Consensus
Masco Corporation Price and Consensus | Masco Corporation Quote
VGM Scores
At this time, Masco's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of' A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.