Masco Corporation, based in Livonia, Michigan, has seen its stock underperform significantly compared to the broader market over the past year. The company’s shares have declined by 22%, while the S&P 500 Index has experienced a notable increase of nearly 12.6%. As of October 29, 2023, Masco’s market capitalization stands at approximately $13 billion, reflecting its status as a key player in the home improvement and building products sector.
The company’s product range includes faucets, kitchen and bath cabinets, architectural coatings, and builders’ hardware, which are sold through various retail outlets. Despite its strong brand presence, Masco’s stock performance this year has been lackluster, with a 14.8% year-to-date decline. In comparison, the S&P 500 has risen by 14.6% during the same period, underscoring the challenges faced by Masco.
Challenges Impacting Masco’s Stock
Several factors contribute to Masco’s struggles, including elevated tariffs, commodity cost pressures, and a decline in demand for DIY paint and plumbing products. These challenges were highlighted when the company reported its third-quarter results, which fell short of Wall Street expectations. On October 29, Masco’s shares closed down by 4.7% after announcing an adjusted earnings per share (EPS) of $0.97, below the anticipated $1.02. Additionally, the reported revenue of $1.92 billion did not meet forecasts of $1.94 billion.
Looking ahead, Masco anticipates a full-year adjusted EPS ranging from $3.90 to $3.95. Analysts project a 4.4% decline in EPS to $3.92 on a diluted basis for the current fiscal year, which concludes in December. The company’s earnings surprise history has been mixed; it exceeded consensus estimates in two of the last four quarters but fell short in the other two.
Analysts’ Consensus and Future Outlook
Among the 22 analysts monitoring Masco’s stock, the consensus rating is categorized as a “Moderate Buy.” This assessment is based on six “Strong Buy” ratings, 15 “Holds,” and one “Moderate Sell.” This sentiment reflects a decline in bullishness compared to previous evaluations, where seven analysts had indicated a “Strong Buy” just a month earlier.
On November 5, Argus analyst Chris Graja maintained a “Buy” rating for Masco, but adjusted the price target downward to $80, suggesting a potential upside of 29.4% from current levels. The mean price target among analysts is $74.17, indicating a 20% premium over Masco’s current trading price. The highest target, set at $85, implies an ambitious upside potential of 37.5%.
As Masco navigates these challenges, it remains a focal point for investors and analysts alike, who continue to evaluate its long-term value in a competitive market.
