Masco Corporation Hits 52-Week High on Solid Q2 Results
Share price of Masco Corporation (MAS) reached a new 52-week high of $23.99 on Sep 4. Shares of the home improvement and building products company eventually closed at $23.74, yielding a year-to-date return of 5.8%.
The stock price has been rising ever since the company announced solid second-quarter fiscal 2014 results on Jul 28. Masco Corporation gained traction from improving housing construction trends in North America, improvement in Europe and strong international plumbing sales.
Growth Drivers
Masco Corporation’s adjusted earnings of 32 cents per share in the second quarter of 2014 surpassed the Zacks Consensus Estimate of 28 cents by 14.3%. Earnings increased 39% year over year on the back of strong margins and revenue.
Masco’s net sales of $2.26 billion were in line with the Zacks Consensus Estimate. Revenues however grew 5.1% year over year owing to successful new products and program launches.
Geographically, North American sales increased 4% year over year to $1.84 billion owing to an improvement in demand driven by new home construction. International sales rose 9% (2% in constant currency) to $417 million driven by an improvement in Europe and strong performance by international plumbing.
During the quarter, Masco witnessed solid sales increase in all the segments, excluding cabinets. Plumbing product segment sales were driven by an improvement in the 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.
During the quarter, Masco also witnessed a solid increase in gross and operating margins on the back of increased operating leverage.
Masco is positive that new home construction and repair and remodel activity will improve at a steady rate in the remaining 2014, which in turn will increase the demand for the company’s products and services.
Masco Corporation carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Investors interested in the sector may consider stocks like Gibraltar Industries, Inc. (ROCK), PGT, Inc. (PGTI) and UCP, Inc. (UCP), all carrying a Zacks Rank #2 (Buy).
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