Q3 Earnings Preview for Masco (NYSE:MAS)

in EARNINGS/INVESTING IDEAS by

Masco Corporation (NYSE:MAS) is scheduled to report Q3 earnings results on October 28, 2020.

The company is expected to report earnings of $0.78/share on revenue of $1.848 billion. The consensus earnings per share (EPS) of $0.78/share is based on a poll of 20 analysts and represents a growth in eps of 14.3% over the same quarter last year, when the company reported earnings of $0.68/share.

The revenue forecast of $1.848 billion based on a poll of 17 analysts implies a year-over-year (YoY) decline in revenue of −5.1%. Last year the company reported $1.947 billion in revenue for the quarter.

Expected to report EPS growth of 14.3% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,847.76 $1,947.00 −5.1%
EPS $0.78 $0.68 14.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Masco Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.69 $0.84 21.1% Beat
Q1, 2020 $0.35 $0.46 29.6% Beat
Q4, 2019 $0.53 $0.54 1.0% Beat
Q3, 2019 $0.66 $0.68 3.6% Beat
Q2, 2019 $0.81 $0.88 8.1% Beat
Q1, 2019 $0.47 $0.44 −7.0% Missed
Q4, 2018 $0.56 $0.64 14.5% Beat
Q3, 2018 $0.70 $0.65 −6.8% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 1.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $56.34 $57.16 1.5% Increase
April 29, 2020 $41.72 $41.04 −1.6% Decline
February 11, 2020 $49.65 $47.06 −5.2% Decline
October 30, 2019 $44.65 $46.25 3.6% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.86, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.86 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Masco Corporation is currently trading at $56.18/share, up 0.6% for the day. The company is trading at approximately 93.4% of its 52-week high of $60.16/share. The company’s stock price is down −1.7% since the last earnings report and down −1.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 48.69 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:MAS Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 22.47 and a forward P/E multiple of 20.27.

Masco Corporation’s current share price also implies a price-to-book (P/B) multiple of −108.04. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $56.18
P/E Ratio 22.5x
P/E Ratio (Fwd) 20.3x
PEG Ratio 0.2
Total Debt / Total Capital 16.5%
Levered Free Cash Flow $774 million
EV / EBITDA 13.3x

Finbox

Masco Corporation is a large-cap stock with a market capitalization of $14.693 billion and a total enterprise value of $16.706 billion. The company operates in the Industrials sector and the Building Products industry.

Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally. The company operates through two segments, Plumbing Products and Decorative Architectural Products. The Plumbing Products segment offers faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, toilets, acrylic tubs, shower trays, spas, exercise pools, and fitness systems; brass, copper, and composite plumbing system components; thermoplastic extrusions, extruded plastic profiles, specialized fabrications, and PEX tubing products; and other non-decorative plumbing products. This segment provides its products under the DELTA, BRIZO, PEERLESS, HANSGROHE, AXOR, GINGER, NEWPORT BRASS, BRASSTECH, WALTEC, BRISTAN, HERITAGE, MIROLIN, HÜPPE, HOT SPRING, CALDERA, FREEFLOW SPAS, FANTASY SPAS, ENDLESS POOLS, BRASSCRAFT, PLUMB SHOP, COBRA, COBRA PRO, and MASTER PLUMBER brands. The Decorative Architectural Products segment offers paints, primers, specialty coatings, stains, and waterproofing products; cabinet and door hardware, functional hardware, wall plates, hook and rail products, and picture hanging accessories; decorative bath hardware, and shower accessories and doors; and decorative indoor and outdoor lighting fixtures, ceiling fans, landscape lighting, and LED lighting systems. This segment provides its products under the BEHR, KILZ, LIBERTY, BRAINERD, FRANKLIN BRASS, KICHLER, and ÉLAN brands. It sells its products to the plumbing, heating, and hardware wholesalers; home centers and online retailers; hardware stores; electrical and landscape distributors; lighting showrooms; building supply outlets; and other mass merchandisers. Masco Corporation was founded in 1929 and is headquartered in Livonia, Michigan.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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