This building products company posted earnings of $1.04 per share last quarter, compared to analysts’ estimates of $0.78.
Masco Corporation (MAS)
Founded in 1929 and headquartered in Livonia, Michigan, Masco Corporation designs, manufactures, and distributes home improvement and building products worldwide, and offers its products in three different segments: Plumbing, Decorative Architectural Products and other Specialty Products. The company offers them 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 company is currently ranked at 373 on the Fortune 500. Its current total market capitalization of $14.0 billion makes MAS a large capitalization stock (a large-cap stock has a market capitalization value of more than $10 billion) with a long history of consistent earnings growth and dividend payments.
It is considered a solid and well-diversified business with a wide economic moat and a sustainable competitive advantage over its rivals, which also enjoys an outstanding management and corporate culture. According to Yahoo! Finance, consensus estimates call for the company to earn about $3.02 per share this year, up from $2.25 per share last year, and to go to about $3.21 per share next year. Masco Corporation has paid dividends to investors since 1944, and has increased its payments for six consecutive years. During the past ten years has increased its dividends at an average rate of 7.6%, and its quarterly payment is $0.14 per share.
The value of dividends reinvestment: A hypothetical investment in Masco has grown cumulatively (including dividends reinvested) 3,420.04% during the past forty years. The same investment has grown only 1,446.03% in the same period of time, excluding dividends. According to the data and calculations of the financial website dqydj.com (don’t quit your day job), a periodic monthly investment of $100 in MAS for the past 40 years would has grown to $486,680, including dividends reinvested. MAS still has room for significant dividend payments and dividend increases in the coming years, since the company’s current Dividend Payout Ratio (DPR), which is its dividend payments as a percentage of its earnings, is just 19%.
Its current Price to Earnings ratio (P/E --a measure of valuation) of 18.74 is 27.3% below the US Market Index, and its Forward P/E ratio is 18.18. Its Price to Sales ratio (P/Sales) of 2.08 is 13.3% below the US Market index. And according to Morningstar, the stock is trading at a 3% discount, making it attractive for investors with a long-term investment horizon. Technically (from the chart’s perspective) MAS also looks attractive, trading 10.9% below its all-time high), while it is forming a long price consolidation pattern between $60 and $52 approximately, in which $52 is acting as a technical support level.
The index funds Vanguard Total Stock Market Index and Vanguard Mid Cap Index are major shareholders of MAS, holding 2.8% and 2.3% of its shares, respectively. Masco’s main competitors are Fortune Brands Home & Security Inc. (FBHS) and Sherwin-Williams Co. (SHW). Masco’s 5-year Beta (a measure of the volatility, or systematic risk in comparison to the market as a whole as evidenced by the S&P 500® Index) is 1.51 so the stock is 51% more volatile than the Market.
Vita Nelson, www.directinvesting.com, 914-925-0022, November 2, 2020