Year to date, shares of Masco(MAS) - Get Report are up 18.4%. Can this stock go higher? Masco is expected to report third-quarter fiscal 2016 earnings results on Oct. 25.

The building materials sector has been red hot. Deck material maker Trex(TREX) - Get Report   is up 57% this year, while Armstrong Flooring(AFI) - Get Report is up 45%.

According to John Burns Real Estate Consulting and the Harvard Joint Center for Housing Studies, expenses for repairs and remodeling are expected to surpass $300 billion this year, ahead of the previous high of $285 billion in 2007.

According to census data analyzed by Burns, homes built more than 30 years ago make up 65% of the nation's housing stock, up from 47% in 1995.

Burns projects that homeowners are expected to spend more than $215 billion on remodeling this year alone. About $73 billion of that total will be spent on projects that cost over $5,000.

How long a homeowner has owned the current home dictates the types of projects to tackle. For example, people who have been in their home for three years or less are interested in replacing windows, kitchen and baths, and adding a new deck. Those who have been in their home longer than 10 years are more interested in re-siding and roofing.

Approximately 83% of Masco's revenue comes from the repair and remodel market. Harvard forecasts that market will grow by the mid-single digits over the next year.

First-half fiscal 2016 revenue grew by 3.7%. But for the second half, analysts are expecting revenue to accelerate to 6%. Paints and decorative architectural products (10%), windows (10%) and plumbing products (7%) are expected to drive the results.

The consensus is looking for third-quarter revenue of $1.92 billion and earnings of 44 cents per share. Gross margins are projected to dip by as much as 270 basis points sequentially to 32.8%. The weakness in margins comes mostly from the paint business. The main ingredient in paint is titanium dioxide, and its price is scheduled to increase by 6% in the fourth quarter. In addition, the company is spending heavily on taking the Behr Paint brand from the do-it-yourself marketplace to the professional level.

For fiscal 2017, the consensus estimate for revenue is $7.835 billion, up 5.8%, with earnings of $1.95 per share. The company could have a margin on earnings before interest, taxes, depreciation and amortization as high as 18%. (It should end 2016 with a 17.7% EBITDA margin.) That would put earnings per share over $2 next year.

If I'm right, it should be easy for Masco to make it to $40 per share, since its three-year average forward multiple is 20 times. Despite the tired-looking stock, this renovation isn't over.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.