MAS - Masco: Q1 Results Leave Downside Risk To Guidance

2024-04-25 14:10:12 ET

Summary

• Masco's shares fell 4.5% after reporting earnings, but are still up 37% from a year ago.
• Quarterly results were decent, but the stock was priced for perfection.
• The company's plumbing unit performed well, but its paint business faced volume pressures and margin compression.
• It is not clear we will see results, especially in paint, accelerate, and full-year guidance appears ambitious.

Shares of Masco ( MAS ) fell about 4.5% on Wednesday after reporting earnings, though shares are still up an impressive 37% from a year ago. Quarterly results were actually not that bad, and this is a case of a stock priced for perfection, in my view. Back in January , I downgraded MAS to a hold from a buy, fearing that valuation was full, and it would require materially stronger earnings to continue rallying. Since that downgrade, shares are basically flat, returning 2% vs the ~5% return in the S&P 500. With new results, now is an opportune time to revisit shares. I still am cautious, even as I have a positive view on the company’s underlying quality....

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