Masco Corporation (MAS), one of the world's leading manufacturers of home improvement and building products, is set to unveil its third quarter 2012 results on October 29, 2012, after market closes. The Zacks Consensus Estimate for third quarter earnings is pegged at 12 cents on revenues of $2.03 billion.
Second Quarter 2012 Recap
Masco Corporation’s adjusted earnings of 10 cents per share in the second quarter of 2012 missed the Zacks Consensus Estimate by a penny due to lower-than-expected revenues. Earnings, however, grew 66% from the prior-year quarter.
Masco’s net sales of $2.0 billion in the reported quarter missed the Zacks Consensus Estimate of $2.08 billion. Revenues were flat year over year, hurt significantly by currency headwinds and a sluggish global economy. Excluding the impact of currency, revenues were up 3% year over year. Year-over-year top-line growth was attributed to positive pricing, rise in sales of plumbing products in North America and increase in new home construction activity.
Agreement of Estimate Revisions
None of the13 estimates for the third quarter of 2012 were revised in the last 7 days. Over the last 30 days, 1 out of the 13 estimates moved upwards.
Over the last 30 days, one out of 12 estimates was revised downward for the full year 2012, while one estimate was revised upwards.
The improving new construction activities have resulted in the upward movement of the estimates. However, the repair and remodeling market is sluggish, owing to restricted consumer spending and high unemployment, which has resulted in the downward movement of the estimate.
Magnitude of Estimate Revisions
The Zacks Consensus Estimate for the third quarter of fiscal 2012 has remained static at 12 cents over the last 7 and 30 days.
Similarly, the Zacks Consensus Estimate for fiscal 2012 has remained static at 26 cents over the last 7 and 30 days.
Masco Corporation has missed the Zacks Consensus Estimate in two out of the last four quarters. The company result beat the Zacks Consensus Estimate in the first quarter of 2012 and was in line with the same in the third quarter of 2011.
Currently, we have a Neutral recommendation on Masco Corporation, a peer of United Rentals Inc. (URI). The stock carries a Zacks #3 Rank (a short-term ‘Hold’ rating).
We are positive about the long-term fundamentals of Masco. We are encouraged by Masco’s continued focus on product innovation and cost improvements. We also like the company’s initiative to restructure its business by exiting less profitable and underperforming assets. However, the company’s revenues were hurt significantly by currency headwinds and challenges in the cabinetry business. Management also lowered its expectations for the second half due to volatility in North American repair/remodel markets and challenges in Europe. Therefore we prefer to remain on the sidelines.
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