On May 25, 2015, we issued an updated research report on Masco Corporation MAS.
On Apr 28, this home improvement and building products company reported first quarter 2015 results. Masco Corporation’s adjusted earnings of 20 cents per share in the first quarter of 2015 lagged the Zacks Consensus Estimate by 4.8%. Net sales of $2.02 billion missed the Zacks Consensus Estimate by about 1%. However, both earnings and revenues increased year over year.
Adjusted earnings increased 43% year over year driven by improved revenues and strong margins. Net sales increased 2.7% year over year.
During the first quarter of 2015, the company witnessed higher demand for its products given the increasing momentum in the repair and remodeling industry and new home construction activities. First quarter 2015 was also marked by favorable relationship between selling prices and commodity costs and benefits from cost control initiatives. However, unfavorable foreign currency hurt overall results in the first quarter of 2015.
Foreign currency cut adjusted earnings by 2 cents during the quarter. Unfavorable foreign currency, due to weaker euro against a stronger U.S dollar, dragged net sales by $77 million during the quarter.
Segment wise, the company reported strong sales growth in Cabinet, Decorative Architectural Products, Other Specialty Products and Installation segments. However, Plumbing segment revenues declined during the quarter due to a stronger U.S dollar. But again, though the Cabinet segment reported higher revenues, it continued to report losses, indicating that the segment will require some more time to recover.
Nonetheless, the company is confident about 2015. With an improving U.S. economy, the company expects to witness growing demand for repair and remodeling and new home construction products in 2015.
Masco carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the industry include Headwaters Incorporated HW, Trex Co. Inc. TREX and Aspen Aerogels, Inc. ASPN. While Headwaters sports a Zacks Rank #1 (Strong Buy). Trex and Aspen Aerogels hold a Zacks Rank #2 (Buy).
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