This is an old version of MAS from 13 days ago (Oct 31, 2026).See the latest version
MAS
- Price
- $80.64
- Discount category
- Close to intrinsic value
- Next earnings
- Jan 28, 2027
- Next earnings is estimate
- Yes
- Company name
- Masco
- Sector
- Building products
- About
- Masco designs, makes and sells branded home improvement and building products. It reports two segments: Plumbing Products and Decorative Architectural Products. Plumbing Products includes Delta and hansgrohe faucets, bath and shower fixtures, Liberty hardware and HotSpring spas. Decorative Architectural Products includes Behr paint. Masco makes money from the margin on these products. Its sales depend mostly on residential repair and remodel spending, and less on new home construction. Net sales were $1.97 billion in Q3 2026, and about 80% of them were in North America.
- Thesis
- The market discounts Masco because US repair and remodel spending is weak and investors doubt that its sales growth can last. In Q2 2026, North American sales fell 5% in local currency, and a one-time benefit from tariff refunds hid the weaker sales. The stock fell 11.1% on July 29, 2026, the day of that report. In Q3 2026, North American sales grew 5% in local currency, with help from higher prices, and adjusted EPS grew 23%. But the CEO said on October 28, 2026 that demand will stay weak in the near term. Mortgage rates near 7.5% in September 2026 keep home sales low, and fewer home sales mean less remodeling and less paint demand. For the gap to close, sales must keep growing in 2027 without tariff refunds, and volumes must grow, not only prices. The adjusted operating margin must stay high, and Masco must keep its buybacks, which used $852 million in the first nine months of 2026, without a large rise in debt. The next tests are the full-year 2026 report and the 2027 outlook, expected in early 2027, and the quarterly reports of 2027. If volumes recover, the gap can close over the next four to six quarters. If the housing market stays weak, the discount can last into 2028.
- Risks
- Masco's sales depend on US repair and remodel spending and on DIY paint demand. Mortgage rates near 7.5% in September 2026 keep home sales low. North American sales grew 5% in local currency in Q3 2026, with help from higher prices, but the CEO expects weak demand in the near term. If demand stays weak, volumes and margins fall. Masco imports many plumbing products, and tariffs, mainly on goods from China, raise its costs. Operating profit for the first nine months of 2026 includes a one-time net benefit from tariff refunds of about $90 million, which will not repeat. Masco sells through a small number of large home centers and wholesalers. The loss of shelf space or a change in a large customer's orders would lower sales. Masco spends on growth investments and buybacks while sales fall. Total liabilities were larger than total assets at September 30, 2026. If cash flow falls, Masco may need to cut buybacks or borrow more.
- Balance sheet
- Cash: $610M Debt: $3.2B Net debt: $2.6B EBITDA, last 12 months: $1.5B Net debt / EBITDA: 1.7× (low) Interest cover: 14× Undrawn credit line: $1.0B, to March 2031 Debt due within 12 months: $2.0M Masco funds itself with unsecured notes and a term loan of the parent company. At September 30, 2026, long-term debt was $3.245 billion and notes payable were $2 million. Debt includes $300 million borrowed on a delayed draw term loan of up to $500 million, signed on April 21, 2026 and due April 21, 2028, at a weighted average rate of 4.517% at September 30, 2026. EBITDA is operating profit plus depreciation and amortization for the 12 months to September 30, 2026, and it includes the one-time net benefit from tariff refunds of about $90 million in the first nine months of 2026. Interest cover is operating profit divided by interest expense for the first nine months of 2026. The $1.0 billion revolving credit facility, signed on March 20, 2026, ends on March 20, 2031, and nothing was drawn on it at September 30, 2026. Its covenants limit net leverage to 4.0 times and require interest cover of at least 2.5 times, and Masco was in compliance at September 30, 2026. Total liabilities of $5.53 billion were larger than total assets of $5.34 billion. In the first nine months of 2026, Masco bought back $852 million of shares and paid $191 million of dividends, more than its operating cash flow of $788 million. It also received $60 million, net of cash disposed, from the sale of Bristan. Masco expects to use about $1.0 billion for share buybacks in 2026. As of Sep 30, 2026.
- Checkpoints
- Oct 28, 2026: Q3 2026 results: North American sales. Passed. Watch: North American sales that are flat or up in local currency and an adjusted operating margin near Q2 without new tariff refunds pass; another fall in North American sales or a cut to the 2026 outlook fails. Outcome: North American sales grew 5% in local currency, the adjusted operating margin rose to 17.9% from 16.3% a year earlier, and Masco raised its 2026 adjusted EPS outlook to $4.65 to $4.75. Jan 28, 2027 (estimate): Full-year 2026 results and 2027 outlook. Pending. Watch: A 2027 outlook with sales growth and adjusted EPS above 2026 without the tariff refunds passes; an outlook of falling sales fails.
- Recent events
- Oct 28, 2026: Masco reported Q3 2026 results. Net sales grew 3% to $1.97 billion, and grew 4% in local currency without the sold Bristan business. North American sales grew 5% in local currency. The adjusted operating margin was 17.9%, up from 16.3%, and adjusted EPS grew 23% to $1.19. Masco raised its 2026 adjusted EPS outlook to $4.65 to $4.75, from $4.40 to $4.60. The CEO said that demand will stay weak in the near term. In Q3 2026, Masco also sold Bristan, a UK maker of faucets and showers, for £49 million ($65 million), net of cash disposed. Sep 28, 2026: Masco said that it will release Q3 2026 results on October 28, 2026, before its conference call at 8:00 a.m. ET. Sep 15, 2026: Masco appointed Yaron Ben David as Chief Technology and AI Officer, effective September 15, 2026. Aug 12, 2026: Masco declared a quarterly dividend of $0.32 per share, payable on August 28, 2026. Jul 29, 2026: Masco reported Q2 2026 results. Net sales fell 3% to $1.99 billion, and North American sales fell 5% in local currency. Adjusted EPS grew 26% to $1.64, helped by a net benefit of about $95 million from tariff refunds. Masco raised its 2026 adjusted EPS outlook to $4.40 to $4.60, from $4.10 to $4.30, because of the refunds. The stock fell 11.1% that day, and Evercore ISI cut its rating to In Line. Jul 27, 2026: Masco completed a $300 million accelerated share repurchase that it started in May 2026, under the $2.0 billion buyback authorization that the board approved on February 10, 2026. It received about 4.1 million shares in total. Apr 21, 2026: Masco announced that Jai Shah, Group President of Plumbing and Wellness, will leave the company on July 3, 2026. Apr 21, 2026: Masco signed a two-year delayed draw term loan of up to $500 million, due April 21, 2028. It had borrowed $300 million of it at June 30, 2026.