Shares of Masco are gaining 2.34% to $26.23 in morning market trading Wednesday after the company reported strong second quarter earnings results.
Yesterday, Masco announced $0.38 earnings per share, beating analysts' estimate of $0.36 per share.
Revenue increased 3% year-over-year to $1.9 billion in the second quarter.
"We believe Masco is the best player on the recovery in R&R and big ticket, while it has added optionality from company specific drivers, which should help bridge the valuation gap relative to its peers," Jefferies analysts said.
After delivering strong results in cabinets and pent-up demand, coupled with cost takeout underway, Masco is expecting a higher EBIT guidance for fiscal year 2015 to $25 million from $10 million.
Other upside catalyst includes a sharp recovery in the housing market with new starts reaching 1.5 million, Jefferies added.
Masco, based in Taylor, MI, manufactures, distributes and installs home improvement and building products.
Separately, 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 multiple strengths, 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 revenue growth, notable return on equity, reasonable valuation levels, solid stock price performance 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:
- MAS's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 2.7%. 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.
- Compared to its closing price of one year ago, MAS's share price has jumped by 27.27%, 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Building Products industry and the overall market, MASCO CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to -$152.00 million or 37.70% when compared to the same quarter last year. Despite an increase in cash flow of 37.70%, MASCO CORP is still growing at a significantly lower rate than the industry average of 143.07%.
- You can view the full analysis from the report here: MAS Ratings Report