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Masco Corporation’s (MAS - Free Report) adjusted earnings of 50 cents per share in third-quarter 2017 missed the Zacks Consensus Estimate of 53 cents by 5.7%. Adjusted earnings increased 22% year over year.
Masco’s net sales of $1.94 billion missed analysts’ expectation of $1.96 billion by about 1%. Revenues, however, grew 3% year over year on the back of strong sales of Plumbing and Decorative Architectural Products.
North American sales increased 2% year over year to $1.53 billion and international sales were up 4% to $407 million.
Margins
Adjusted gross profit grew 5.3% to $651 million, while adjusted gross margin improved 70 basis points (bps) to 33.6%.
Adjusted operating profit increased 7.6% to $296 million. Adjusted operating margin increased 60 bps to 15.3%.
As a percentage of net sales, selling, general and administrative expenses (adjusted) were 18.3%, similar to the prior-year quarter.
Adjusted operating margin increased 150 bps to 17.5% in North America and decreased 230 bps to 14.4% in international markets.
Masco Corporation Price, Consensus and EPS Surprise
Plumbing Products: The segment recorded revenues of $951 million, reflecting an increase of 6%. Excluding the impact of foreign currency translation, revenues increased 4% on growth in North America and internationally.
Adjusted operating margin of 18.5% decreased 140 bps year over year.
Decorative Architectural Products: Segmental revenues of $553 million were up 3%, on growth from Liberty’s builders’ hardware and Behr’s pro initiative.
However, operating margin decreased 190 bps to 18.8%.
Cabinets and Related Products: Segmental revenues of $229 million decreased 4% year over year due to lower sales to U.S. and U.K. builders.
Adjusted operating margin was 8.3% in the quarter, down 40 bps from the year-ago quarter.
Windows and Other Specialty Products: Segmental revenues totaled $203 million, flat year over year due to the divestiture of Arrow Fastener. Excluding the impact of foreign currency translation, net sales increased 9% led by North American windows business.
Operating margin was 11.3% in the quarter as against a negative 4.9% a year ago.
Financials
Masco ended the quarter with cash and cash investments of $1.14 billion, as of Sep 30, 2017, compared with $990 million as of Dec 31, 2016.
Guidance
For 2017 earnings, the company slashed the upper end of its earlier guided range owing to the impact of hurricanes. It now expects earnings per share in the range of $1.93 to $1.97. Earlier, the company had expected 2017 EPS in the range of $1.93 to $2.00.
The company remains focused on achieving its 2019 EPS target of $2.50.
PulteGroup Inc.’s (PHM - Free Report) third-quarter 2017 adjusted earnings of 60 cents per share beat the Zacks Consensus Estimate of 59 cents by 1.7%. Also, quarterly earnings reflected a solid 40% jump from the year-ago quarter’s 43 cents.
Upcoming Releases in the Construction Sector
Louisiana-Pacific Corp. (LPX - Free Report) is scheduled to release its quarterly numbers on Nov 6. The Zacks Consensus Estimate for earnings is pegged at 76 cents, an increase of 138.5% on a year-over-year basis.
D.R. Horton, Inc. (DHI - Free Report) is scheduled to release its quarterly numbers on Nov 9. The Zacks Consensus Estimate for earnings is pegged at 82 cents, an increase of 9.6% on a year-over-year basis.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Masco (MAS) Misses Q3 Earnings Estimates, Cuts 2017 View
Masco Corporation’s (MAS - Free Report) adjusted earnings of 50 cents per share in third-quarter 2017 missed the Zacks Consensus Estimate of 53 cents by 5.7%. Adjusted earnings increased 22% year over year.
Masco’s net sales of $1.94 billion missed analysts’ expectation of $1.96 billion by about 1%. Revenues, however, grew 3% year over year on the back of strong sales of Plumbing and Decorative Architectural Products.
North American sales increased 2% year over year to $1.53 billion and international sales were up 4% to $407 million.
Margins
Adjusted gross profit grew 5.3% to $651 million, while adjusted gross margin improved 70 basis points (bps) to 33.6%.
Adjusted operating profit increased 7.6% to $296 million. Adjusted operating margin increased 60 bps to 15.3%.
As a percentage of net sales, selling, general and administrative expenses (adjusted) were 18.3%, similar to the prior-year quarter.
Adjusted operating margin increased 150 bps to 17.5% in North America and decreased 230 bps to 14.4% in international markets.
Masco Corporation Price, Consensus and EPS Surprise
Masco Corporation Price, Consensus and EPS Surprise | Masco Corporation Quote
Segmental Analysis
Plumbing Products: The segment recorded revenues of $951 million, reflecting an increase of 6%. Excluding the impact of foreign currency translation, revenues increased 4% on growth in North America and internationally.
Adjusted operating margin of 18.5% decreased 140 bps year over year.
Decorative Architectural Products: Segmental revenues of $553 million were up 3%, on growth from Liberty’s builders’ hardware and Behr’s pro initiative.
However, operating margin decreased 190 bps to 18.8%.
Cabinets and Related Products: Segmental revenues of $229 million decreased 4% year over year due to lower sales to U.S. and U.K. builders.
Adjusted operating margin was 8.3% in the quarter, down 40 bps from the year-ago quarter.
Windows and Other Specialty Products: Segmental revenues totaled $203 million, flat year over year due to the divestiture of Arrow Fastener. Excluding the impact of foreign currency translation, net sales increased 9% led by North American windows business.
Operating margin was 11.3% in the quarter as against a negative 4.9% a year ago.
Financials
Masco ended the quarter with cash and cash investments of $1.14 billion, as of Sep 30, 2017, compared with $990 million as of Dec 31, 2016.
Guidance
For 2017 earnings, the company slashed the upper end of its earlier guided range owing to the impact of hurricanes. It now expects earnings per share in the range of $1.93 to $1.97. Earlier, the company had expected 2017 EPS in the range of $1.93 to $2.00.
The company remains focused on achieving its 2019 EPS target of $2.50.
Zacks Rank & Peer Release
Masco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PulteGroup Inc.’s (PHM - Free Report) third-quarter 2017 adjusted earnings of 60 cents per share beat the Zacks Consensus Estimate of 59 cents by 1.7%. Also, quarterly earnings reflected a solid 40% jump from the year-ago quarter’s 43 cents.
Upcoming Releases in the Construction Sector
Louisiana-Pacific Corp. (LPX - Free Report) is scheduled to release its quarterly numbers on Nov 6. The Zacks Consensus Estimate for earnings is pegged at 76 cents, an increase of 138.5% on a year-over-year basis.
D.R. Horton, Inc. (DHI - Free Report) is scheduled to release its quarterly numbers on Nov 9. The Zacks Consensus Estimate for earnings is pegged at 82 cents, an increase of 9.6% on a year-over-year basis.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>