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Vitalii Liubimov's Avatar
published in Blogs
Sep 28, 2019

Building Materials supplier Masco trending higher behind solid earnings growth

Masco Corp (NYSE: MAS) manufactures and distributes home improvement and building products. The company’s plumbing product line includes Delta Faucets, Peerless, Hot Spring, and Elan as well as others. The Decorative Architectural Product line includes the brand names of Behr, Kilz, and Franklin Brass. The Cabinetry line includes Kraftmaid, Cardell, and Merrillat. Masco is headquartered in Livonia, Michigan and was founded in 1929.

The stock has been trending higher since December and is up over 50% since then. Strong earnings growth has helped the stock move higher. Masco has seen earnings grow by 24% per year over the last three years and they were up by 16% in the most recent quarterly report.

The company’s return on equity is a little questionable with both the Wall Street Journal and Investor’s Business Daily not showing an ROE while Yahoo Finance shows one that is ridiculous at 789%. Excluding that indicator, the return on assets is at 13.95%, the profit margin is 13.1%, and the operating margin is 15.04%

The Tickeron SMR rating for Masco is 1 and that indicates very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents.

The Tickeron Valuation Rating of 2 indicates that Masco is seriously undervalued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. Masco is currently trading at a P/E ratio of 16.74 and that is well below the average stock in the industry.

Looking at the chart for Masco we see how the stock has rallied off the December low. You can also see how a trend channel has formed over the last four months with the lower rail connecting the lows from June and August while the upper rail connects the highs from July and September. The gap higher in July did push the stock through the upper rail for a day, but then the stock slipped back.

One of the more encouraging signs for Masco for me was the bullish crossover from the daily stochastic readings on September 26. In each of the last three instances where the indicators have been in oversold territory and made a bullish crossover the stock has rallied over 14% within the next month or two.

We also see that the stock crossed above its 50-day moving average toward the end of August and appears to be using the trend line as support at this time.

Turning our attention to the sentiment toward Masco, there are 16 analysts covering the stock currently with 10 “buy” ratings and six “hold” ratings. This puts the buy percentage at 62.5% and that is below the average buy percentage. What is really interesting about Masco is how the ratings have changed. Just three months ago there were 21 analysts covering the stock and there were 18 “buy” ratings and only three “hold” ratings, putting the buy percentage at 85.7%. This suggests that not only is the buy percentage below average, but analysts have become considerably less bullish as the stock has rallied.

The short interest ratio for the stock is currently at 2.4 which is slightly below average and indicates slightly more optimism than the average stock. The short interest did drop from the end of August through the first half of September.

Masco is set to announce earnings again on October 30. The report will be worth keeping an eye on as it was earnings that created the big gap higher in July and the big gap lower in April.

Related Ticker: MAS

MAS in upward trend: 10-day moving average crossed above 50-day moving average on January 27, 2025

The 10-day moving average for MAS crossed bullishly above the 50-day moving average on January 27, 2025. This indicates that the trend has shifted higher and could be considered a buy signal. In of 12 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 59 cases where MAS's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

MAS moved above its 50-day moving average on February 13, 2025 date and that indicates a change from a downward trend to an upward trend.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where MAS advanced for three days, in of 330 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The 10-day RSI Indicator for MAS moved out of overbought territory on January 28, 2025. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 39 similar instances where the indicator moved out of overbought territory. In of the 39 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Momentum Indicator moved below the 0 level on February 03, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on MAS as a result. In of 89 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

The Moving Average Convergence Divergence Histogram (MACD) for MAS turned negative on February 05, 2025. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .

Following a 3-day decline, the stock is projected to fall further. Considering past instances where MAS declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

MAS broke above its upper Bollinger Band on January 14, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

The Aroon Indicator for MAS entered a downward trend on January 21, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 65, placing this stock better than average.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. MAS’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: MAS's P/B Ratio (164.420) is very high in comparison to the industry average of (9.635). P/E Ratio (19.326) is within average values for comparable stocks, (37.786). Projected Growth (PEG Ratio) (1.887) is also within normal values, averaging (3.657). Dividend Yield (0.015) settles around the average of (0.019) among similar stocks. P/S Ratio (2.204) is also within normal values, averaging (2.262).

Notable companies

The most notable companies in this group are Johnson Controls International plc (NYSE:JCI), Owens Corning (NYSE:OC), Alpha Pro Tech Ltd (ASE:APT).

Industry description

The industry manufactures products used in the construction of residential and commercial buildings. The process involves using materials and other products, and processing them to create finished items such as doors, windows, light fittings, floor coverings, climate control products and other building components and home improvement products. Masco Corporation, Allegion PLC and Lennox International Inc. are major manufacturers of such products.

Market Cap

The average market capitalization across the Building Products Industry is 11.93B. The market cap for tickers in the group ranges from 14.02K to 67.38B. TT holds the highest valuation in this group at 67.38B. The lowest valued company is MTWD at 14.02K.

High and low price notable news

The average weekly price growth across all stocks in the Building Products Industry was 0%. For the same Industry, the average monthly price growth was -1%, and the average quarterly price growth was -2%. KGSPF experienced the highest price growth at 9%, while ASPN experienced the biggest fall at -25%.

Volume

The average weekly volume growth across all stocks in the Building Products Industry was -5%. For the same stocks of the Industry, the average monthly volume growth was -7% and the average quarterly volume growth was 25%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 56
P/E Growth Rating: 59
Price Growth Rating: 59
SMR Rating: 61
Profit Risk Rating: 65
Seasonality Score: -44 (-100 ... +100)
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General Information

a manufacturer of building and home improvement products

Industry BuildingProducts

Profile
Fundamentals
Details
Industry
Building Products
Address
17450 College Parkway
Phone
+1 313 274-7400
Employees
18000
Web
https://www.masco.com
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