| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 64.89 | -2 |
| Intrinsic value (DCF) | 0.01 | -100 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 24.17 | -63 |
Masco Corporation (NYSE: MAS) is a leading global manufacturer of home improvement and building products, operating primarily in North America and Europe. The company operates through two key segments: Plumbing Products and Decorative Architectural Products. Its Plumbing segment includes high-end faucets, shower systems, bath hardware, and connected water solutions under premium brands like Delta, Hansgrohe, and Brizo. The Decorative segment offers paints, coatings, cabinet hardware, and lighting under brands such as Behr, Kichler, and Kilz. Masco serves wholesalers, home centers, online retailers, and specialty distributors, capitalizing on strong brand recognition and innovation in water efficiency and smart home solutions. With a market cap exceeding $13 billion, Masco benefits from steady demand in residential and commercial construction, renovation, and DIY markets. Its diversified product portfolio and strong distribution network position it well in the competitive $800B+ global building products industry.
Masco presents a compelling investment case with its strong brand portfolio, consistent cash flow generation ($1.1B operating cash flow in FY2023), and 3.5% dividend yield. The company trades at 17x P/E (below sector average) despite market-leading positions in plumbing (Delta #1 US faucet brand) and paints (Behr #2 US paint brand). Risks include exposure to cyclical housing markets (beta 1.23), $3.2B debt load (2.5x EBITDA), and potential margin pressure from raw material inflation. Recent 8% revenue growth demonstrates pricing power, but investors should monitor housing starts and DIY trends. The stock offers balanced exposure to both new construction (50% sales) and repair/remodel markets.
Masco maintains competitive advantages through its dual-segment diversification, premium brand architecture, and innovation pipeline. In plumbing, Delta's Smart Touch technology and Hansgrohe's water-saving designs command 20-30% price premiums over generic competitors. The Behr paint brand has gained 300bps market share since 2020 through Home Depot exclusivity and premium Marquee product lines. However, Masco faces intensifying competition from Fortune Brands Innovations (FBIN) in connected plumbing and Sherwin-Williams (SHW) in architectural coatings. The company's $200M annual R&D spend (2.5% of sales) focuses on water efficiency (meeting California Title 24 standards) and IoT-enabled products. Distribution advantages include 85% penetration of top US home centers and growing e-commerce (15% of sales). Working capital efficiency (60-day inventory turnover vs 75-day industry average) supports industry-leading 18% ROIC. The main vulnerability is limited exposure to commercial construction (just 15% of sales) compared to more diversified peers like Ferguson (FERG).