Tags: Masco | MAS | Home Depot | HD | Lowe’s | LOW | building materials

Masco Awaits Housing Rebound

By Dan Weil   |   Wednesday, 29 Jun 2011 11:38 AM

Masco (MAS) is one of the biggest housing-related businesses in the country. It makes plumbing wares, cabinets, paint, windows, and other home products. You’ve probably heard of its brand names — Delta Faucet, KraftMaid Cabinetry, Behr paint, and Milgard Windows. Masco also has a substantial presence in Europe, including Hansgrohe plumbing and Cambrian Windows.

The housing crisis has hit Masco hard. Thanks to falling home prices and rising commodity costs, Masco registered a larger-than-expected loss of $46 million in the first quarter, widening from a $7 million loss a year earlier. Revenue slipped to $1.77 billion from $1.85 billion.

The company didn’t sugarcoat the news. "As anticipated, the trends impacting our business, including depressed new home construction, the deferral of ‘big ticket’ repair and remodel activity, and commodity cost pressures have continued into 2011," management said in a statement.

Zacks Investment Research sees the glass as half empty, issuing a short-term (one to three months) strong sell rating for Masco’s stock after the April 26 earnings report. The long-term (more than six months) rating is underperform.

Rising foreclosures and stringent mortgage standards will continue to hurt the company, Zacks analysts write. “Further, the company has a significant exposure to its two principal customers, Home Depot (HD) and Lowe’s Cos. (LOW).”

Glass half-full

Standard & Poor’s analyst Michael Jaffe sees the glass half full, giving Masco a four-star buy rating. “MAS has been hurt for an extended period by very soft U.S. housing and home improvement markets and Europe's major economic downturn,” he writes.

“Yet we see its business stabilizing over the next year, on better global economies, and their likely positive impact on home improvement and housing markets. We also think MAS's recent amendment of debt covenants puts it in better financial order.”

Jaffe expects Masco’s sales to rise 2 percent this year. He has a 10-month target of $30 for the share price, a substantial premium over recent trading.


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Masco (MAS) is one of the biggest housing-related businesses in the country. It makes plumbing wares, cabinets, paint, windows, and other home products. You ve probably heard of its brand names Delta Faucet, KraftMaid Cabinetry, Behr paint, and Milgard Windows. Masco also...
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