Share price of Masco Corporation (MAS) reached a new 52-week high of $25.43 on Dec 19.
The company performed well in the last two quarters with stable improvement in revenues and margins. Shares of this home improvement and building products company have yielded a year-to-date return of 13.2%.
Growth Drivers
For the past two quarters, Masco Corporation gained traction from positive trends in new home construction activity and improvement in repair/remodel activity in North America and strong international sales. Further the company witnessed consistent improvement in the plumbing and installation business and a rebound in the cabinet segment.
Plumbing product segment sales were driven by an improvement in the wholesale channel and repair and remodel industry. The Decorative Architectural Products segment was driven by successful product launches and programs such as Behr Deckover, Behr Marquee Interior and Pro paint initiatives. The Other Specialty Products segment was driven by volume growth in the North American window business and continued momentum in the international windows business. Net sales of the Cabinet segment increased year over year during the third quarter of 2014 after declining over the past few quarters. Cabinet segment revenues increased on the back of sales increase to dealers, partially offset by a decline in sales to home centers.
Meanwhile Masco’s consistent execution and strong operating leverage have been driving its margins for some time. In fact, its gross and operating margins have been quite strong so far in fiscal 2014. The company’s margins have been driven by favorable volume mix, price/commodity mix and lower expenses.
In addition, Masco regularly divests its less profitable and underperforming businesses to focus more on its core areas to accelerate growth and improve shareholder value. In Sep 2014, the company announced plans to spin-off its Installation and Other Services segment into a separate company to simplify its product portfolio, allowing it to focus more on the growing home-repair and remodeling market.
As the broader housing trends remain stable to slightly positive, most homebuilders believe that housing markets will continue to recover slowly but steadily in 2015.
With steady improvement in new home construction and repair and remodel activity, the demand for Masco’s products and services will continue to increase. Thus prospects for this home improvement and building products company are rather bright in the upcoming quarters.
Masco Corporation carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked stocks in the building/construction industry worth considering include Graña y Montero SAA (GRAM), CaesarStone Sdot-Yam Ltd. (CSTE), Headwaters Incorporated (HW). All the three companies sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment