Masco Corporation (MAS) Shows Promise with Operational Efficiency and Expansion Masco Corporation (MAS) Shows Promise with Operational Efficiency and Expansion

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The Federal Reserve’s decision to stabilize interest rate signals optimism for the housing market and related industry players like Masco Corporation MAS. The Federal Open Market Committee (FOMC) has kept interest rates at a 22-year high of 5.25-5.5%, with hints potential rate cuts by the end of 2024. This stability is a relief for the overall housing industry.

Apart from this, Masco is likely to gain from strong pricing actions and operational efficiency strategies. The company is well-positioned for robust long-term growth, thanks to its market-leading brands, acquisition synergies and strong liquidity position.

Shares of this installer and distributor of home improvement and building products have improved 18.5% in the past six months compared with the Zacks Building Products – Miscellaneous industry’s 23% growth.

The Zacks Rank #2 (Buy) company’s 2024 earnings and sales are likely to witness year-over-year growth of 6.7% and 1.2%, respectively. Earnings estimates for 2024 have increased from $3.93 to $3.98 per share in the past 60 days, depicting analysts’ optimism regarding the stock’s growth potential.

Growth Catalysts

One of the growth catalysts for MAS is its operational efficiency strategies. The company pursues cost-saving measures through initiatives like business consolidations, system implementations, plant and branch closures, global supply-chain enhancements and headcount reductions. These efforts aim to achieve annual savings by reducing corporate expenses and simplifying the organizational structure. Additionally, Masco plans to implement pricing measures to counter the impact of raw material inflation and address tariff challenges by exploring cost-reduction opportunities and relocating production from China as a long-term solution.

Masco also focuses on expansion to drive growth and continues to expand its portfolio with acquisitions. The firm has been successful in acquiring Sauna360 Group Oy, expanding its presence in the faucets market and securing additional shelf space in adjacent product categories, demonstrating the strength of its brand.

Furthermore, the current positive trends in the housing market and improving mortgage rates are likely to support MAS in achieving its long-term goals. It expects to generate 3-5% average annual sales growth organically and anticipates a 10% average annual EPS growth, supported by operating margin expansion through cost productivity and volume leverage.

Other Key Picks

Other top-ranked stocks from the Zacks Construction sector are:

Fluor Corporation FLR currently sports a Zacks Rank #1 (Strong Buy) and has a trailing four-quarter earnings surprise of 37.5%, on average. FLR shares have gained 14.8% in the past year. The Zacks Consensus Estimate for FLR’s 2023 sales and earnings per share (EPS) suggests growth of 12.4% and 197.6%, respectively, from the year-ago period’s reported levels.

M-tron Industries, Inc. MPTI presently flaunts a Zacks Rank of 1 and delivered a trailing four-quarter earnings surprise of 35.6%, on average, with a surge of 288.2% in the past year. The Zacks Consensus Estimate for MPTI’s 2023 sales and EPS indicates growth of 30.6% and 156.7%, respectively, from the previous year’s reported levels.

AECOM ACM carries a Zacks Rank of #2 and has a trailing four-quarter earnings surprise of 2.1%, on average, with a rise of 9.6% in the past year. The Zacks Consensus Estimate for ACM’s 2024 sales and EPS indicates increases of 4.5% and 17.5%, respectively, from the year-ago period’s reported levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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