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Masco Corp.
MAS-N
PARTIAL BUY
Jun 21, 2024
$67.840
Stock price when the opinion was issued
contractors
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There is a severe housing shortage. A nice way to play housing this is in the repair side. Rising rates will prevent homeowners from moving into new homes and they will stay in place. So, this will drive home renovations. We need to add more supply to homes in the next 12-18 months, but until then there will be pressure on this space.
contractors
TOP PICK
Stockchase Research Editor: Michael O'Reilly
MAS is one of the world's largest manufacturers of home improvement products, with brands like Delta and Peerless. Recently reported earnings showed growing cash reserves as shares were bought back and debt retired. We recommend setting a stop loss at $69, looking to achieve $94 -- upside potential of 18%. Yield 1.4%
(Analysts’ price target is $82.60)
contractors
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It looks decent to us; it is a cyclical business, but MAS has grown earnings nicely over the years. The balance sheet is a bit leveraged with debt at 2.5X cash flow, but cash flow is consistent, with high free cash flow conversion. At 16X earnings, it is priced reasonably well considering expected growth of 12% to 16% over the next few years. The 1.72% dividend has shown good growth. The last quarter was good as operating margins have improved with better cost control. The stock is up about 4-fold in the last decade. We would consider it 'good' but not 'great'. Its cyclicality and debt do add some risks here.
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