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Will Masco (MAS) Surpass Estimates This Earnings Season?

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Masco Corporation MAS is scheduled to report fourth-quarter 2020 results on Feb 9, before the opening bell.

In the last reported quarter, the company’s revenues and earnings beat the Zacks Consensus Estimate by 7.1% and 31.7%, respectively. Also, the top and the bottom line gained 16% and 73%, respectively, on a year-over-year basis.

Q4 Estimates

The Zacks Consensus Estimate for Masco’s fourth-quarter revenues is pegged at $1.81 billion, suggesting a 10.3% year-over-year increase. The consensus mark for the company’s third-quarter earnings is pegged at 74 cents per share, indicating an improvement of 37% on a year-over-year basis.

Masco Corporation Price and EPS Surprise

Masco Corporation Price and EPS Surprise
Masco Corporation Price and EPS Surprise

Masco Corporation price-eps-surprise | Masco Corporation Quote

Factors to Consider

Masco’s fourth-quarter revenues are expected to have improved mainly on solid demand for the company’s products due to rising trend of people investing more on their homes. Both Decorative Architectural Products and Plumbing Products segment results are likely to be strong for the to-be-reported quarter. The company expects total sales in the range of 8-10% (excluding the currency impact) and adjusted operating profit margin of 17% for the fourth quarter. Also, a rebounding international market will act as a tailwind. However, uncertainties about business disruptions and raw material inflation are expected to have weighed on margins to some extent.

The Zacks Consensus Estimate for Plumbing Products’ sales of $1,124 million indicates growth of 9.6% year over year. The same for adjusted EBITDA is currently pegged at $238 million, which suggests an improvement of 18.4% from $201 million a year ago. The segment results will likely reflect substantial cost-cutting measures during the quarter. In first-quarter 2020, Masco acquired the entire share capital of SmarTap A.Y Ltd. ("SmarTap"), a developer of a smart bathing system that monitors and controls the temperature and flow of water. SmarTap is included in the Plumbing Products segment, which is likely to have contributed to the segment’s revenues in the fourth quarter.

The consensus mark for the Decorative Architectural Products segment’s sales is currently pegged at $677 million, suggesting year-over-year growth of 10.4%. The same for adjusted EBITDA stands at $130 million, indicating an improvement of 18.2% from the prior-year period.

Overall, inorganic strategies, cost-saving initiatives and industry-leading branded building products are likely to reflect in the company’s fourth-quarter 2020 results. However, rise in raw material costs and expenses related to new product launches remains a potent headwind.

Quantitative Model Prediction

Our proven model predicts an earnings beat for Masco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Masco has an Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, of +0.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Masco currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Worth a Look

Here are some other companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.

AECOM ACM has an Earnings ESP of +5.88% and a Zacks Rank #2.

Watsco, Inc. WSO has an Earnings ESP of +9.75% and a Zacks Rank #2.

Owens Corning Inc. OC has an Earnings ESP of +3.24% and carries a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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Watsco, Inc. (WSO) : Free Stock Analysis Report

AECOM (ACM) : Free Stock Analysis Report

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