Bullish Indicators Point Masco (MAS) Stock in the Right Direction
NEW YORK (TheStreet) --The charts of Masco (MAS) - Get Report are hitting on all cylinders, so to speak. The company manufactures, distributes and installs home improvement and building products.
OK, let's do this a little differently. Take a step or two back from the screen and look at the chart of MAS, above. Notice the first sideways consolidation -- it lasted six months. The second consolidation lasted three months. Now prices have broken out on the upside. Shorter and shorter consolidations suggest a market that is gaining strength. The chart also shows a rising market, above the rising 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line is rising and the Moving Average Convergence Divergence (MACD) is bullish.
This longer term view is also bullish. Prices are still headed higher, and a point-and-figure chart (not shown) suggests a long term price target of $50. Prices are extended a bit, so try to buy a pullback if available.
TheStreet Ratings team rates MASCO CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate MASCO CORP (MAS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, MAS's share price has jumped by 39.92%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MAS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 0.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $283.00 million or 15.51% when compared to the same quarter last year. Despite an increase in cash flow, MASCO CORP's cash flow growth rate is still lower than the industry average growth rate of 43.58%.
- MASCO CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MASCO CORP increased its bottom line by earning $2.33 versus $0.83 in the prior year. For the next year, the market is expecting a contraction of 50.4% in earnings ($1.16 versus $2.33).
- The gross profit margin for MASCO CORP is currently lower than what is desirable, coming in at 33.66%. Regardless of MAS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.03% trails the industry average.
- You can view the full analysis from the report here: MAS
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.