This building products company’s EPS forecasts have just been increased by one analyst, and consensus estimates expect the company to grow by an annual rate of 15.76% over the next five years.
Masco Corporation (MAS)
From Directinvesting.com
Founded in 1929 and headquartered in Livonia, Michigan, Masco Corporation (MAS) designs, manufactures, and distributes home improvement and building products worldwide, and offers its products in four different segments: Plumbing, Decorative Architectural Products, Cabinetry and Windows and other Specialty Products. The company offers its products through home center retailers, online retailers, mass merchandisers, hardware stores, homebuilders, distributors, and other outlets to consumers and contractors, as well as directly to consumers. The products are also sold to both contractors and through national retail chains like Home Depot (HD) and Lowe’s (LOW).
Its current total market capitalization of $9.7 billion makes MAS a mid-capitalization stock (a mid-cap stock has a market capitalization value ranging from $2 billion to $10 billion) and its long history of consistent earnings growth and dividend payments makes it a solid company. It is considered a well-diversified business with a durable competitive advantage over its rivals, which also enjoys a solid corporate culture. According to Yahoo! Finance, consensus estimates call for the company to earn about $2.42 per share this year, up from $1.94 per share last year, and to go to about $2.75 per share next year. Masco Corporation has paid dividends to investors since 1944 and during the past five years, it has increased its dividends at an average rate of 7.7%. Its quarterly payment is $0.12 per share.
Its current Price to Earnings ratio (P/E --a measure of valuation) of 15.8 is 15.0% below the S&P 500® index, its Price to Sales ratio of 1.2 is 40.0% below the index, and its Price to Cash Flow of 10.4 is 18.3% below the index. According to Morningstar, the stock is trading 29% below its Fair Value Estimate, making it attractive for investors with a long-term investment horizon.
Technically (from the chart’s perspective) MAS also looks attractive, trading 31.8% below its 52 weeks high, while it is forming a price consolidation pattern between $46 and $27 approximately, in which $27 is acting as a strong technical support level. The index funds Vanguard Total Stock Market Index and Vanguard Mid Cap Index Institutional are major shareholders of MAS, holding 2.6% and 2.4% of its shares respectively. MASS’ main competitors are Fortune Brands Home & Security Inc. (FBHS) and Sherwin-Williams Co. (SHW).
With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who wish to build a holding over the long term.
Vita Nelson, www.directinvesting.com, 914-925-0022, December 3, 2018