NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and generally weak debt management.
Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Building Products industry and the overall market, MASCO CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for MASCO CORP is currently lower than what is desirable, coming in at 29.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.40% trails that of the industry average.
- Net operating cash flow has decreased to $129.00 million or 31.01% when compared to the same quarter last year. Despite a decrease in cash flow MASCO CORP is still fairing well by exceeding its industry average cash flow growth rate of -48.99%.
- MAS has underperformed the S&P 500 Index, declining 21.54% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio is very high at 3.11 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, MAS has managed to keep a strong quick ratio of 1.56, which demonstrates the ability to cover short-term cash needs.
Masco Corporation manufactures, distributes, and installs home improvement and building products in North America and Europe. Masco has a market cap of $2.8 billion and is part of the
industry. Shares are down 36.4% year to date as of the close of trading on Monday.
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