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Masco Corporation (NYSE:MAS): Is It A Smart Long Term Opportunity?

Simply Wall St

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On 31 March 2019, Masco Corporation (NYSE:MAS) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, as a 13% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 3.3%. Presently, with latest-twelve-month earnings at US$727m, we should see this growing to US$821m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Masco in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Masco

How is Masco going to perform in the near future?

Longer term expectations from the 18 analysts covering MAS’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for MAS, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:MAS Past and Future Earnings, May 8th 2019

By 2022, MAS's earnings should reach US$986m, from current levels of US$727m, resulting in an annual growth rate of 8.7%. This leads to an EPS of $3.38 in the final year of projections relative to the current EPS of $2.38. In 2022, MAS's profit margin will have expanded from 8.7% to 11%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Masco, there are three pertinent aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Masco worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Masco is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Masco? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.