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Masco's Behr Unveils 2020 Color Trends, Eyes on Innovation

Zacks Equity Research

Masco Corporation’s MAS subsidiary Behr Paint Company (“Behr”) has unveiled 2020 Color Trends palette, the latest collection of 15 approachable colors that are fit for both residential and commercial applications.

Based on global color trend research, this collection is a blend of grounding shades, energizing bright colors, deep accent hues and atmospheric pastels. The new palette was specifically curated to inspire professionals and DIYers who select color schemes for projects ahead.

Notably, this design palette is part of Behr’s constant efforts toward innovation that will help the company to generate higher revenues.

Behr is one of the largest manufacturers of paints, primers, decorative finishes, stains and surface preparation products in the United States, Canada, and Mexico. The company focuses on innovating new and trendy colors for DIYers and professionals.

Notably, Behr sells its products through The Home Depot, Inc. (HD) within the Decorative Architectural Products segment (comprising 30% of first-quarter 2019 revenues). In the first quarter, the segment’s revenues grew 5% year over year on the back of the Kichler acquisition, and increase in selling price of paints and other coating products. For 2019, Decorative Architectural Products’ sales are expected to grow 4-6% and margins will likely be 17-18%, backed by benefits from the Kichler acquisition.

Coming to price performance, shares of Masco have outperformed the industry so far this year. The stock has gained 29.5% compared with its industry’s rally of 25.5% in the said period. The price performance was mainly driven by the company’s leading brand portfolio. Notably, its Behr brand is the number one brand in the DIY market for architectural coatings. The company has been witnessing strong demand for market-leading brands.

Zacks Rank & Key Picks

Currently, Masco carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Arcosa, Inc. ACA, Construction Partners, Inc. ROAD and TopBuild Corp. BLD, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arcosa, Construction Partners and TopBuild have a three-five year earnings growth rate of 12.6%, 10%, and 28%, respectively.

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