For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Masco (MAS) ten years ago? It may not have been easy to hold on to MAS for all that time, but if you did, how much would your investment be worth today?
Masco's Business In-Depth
With that in mind, let's take a look at Masco's main business drivers.
Headquartered in Taylor, MI, Masco Corporation manufactures, sells and installs home improvement and building products. Masco operates through the following two business segments:
Plumbing Products (accounting for 63% of 2020 net sales): The segment manufactures and markets an array of faucets, bathing and showering devices, valves, bathtubs, spas and toilets. This segment provides its products under the Delta, Brizo, Peerless, Hansgrohe, Axor, Ginger, Newport Brass, Brasstech, Waltec, Bristan, Heritage, Mirolin, Ha Ppe, Hot Spring, Caldera, Freeflow Spas, Fantasy Spas, Endless Pools, Brasscraft, Plumb Shop, Cobra, Cobra Pro, And Master Plumber brands.
Decorative Architectural Products (37%): The segment manufactures architectural coatings, including paints, primers, specialty paint products, stains and waterproofing products. These products are sold in the U.S., Canada, China, Mexico and South America. This segment provides its products under the Behr, Kilz, Liberty, Brainerd, Franklin Brass, Kichler, And A Lan brands.
On Nov 14, 2019, Masco signed a definitive agreement with ACProducts, Inc. to sell Masco Cabinetry LLC ("Cabinetry") for approximately $1 billion. On Feb 18, 2020, the company announced the completion of the deal for $850 million in cash at closing and preferred stock of $150 million.
As of Dec 31, 2020, the company had cash and cash investments of $1.3 million, in line with the third quarter-end level. At fourth quarter-end, long-term debt was $2.79 billion, unchanged from third-quarter 2020. The company ended the fourth quarter with approximately $2.3 billion of liquidity, which includes full availability of the $1-billion revolver.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Masco, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in April 2011 would be worth $4,795.90, or a 379.59% gain, as of April 16, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
The S&P 500 rose 216.02% and the price of gold increased 14% over the same time frame in comparison.
Analysts are forecasting more upside for MAS too.
Inorganic strategies, cost-saving initiatives and industry-leading branded building products are likely to aid Masco going forward. Notably strong sales growth across the business, improved operating and gross margins, lower SG&A expenses, along with a strong liquidity level are likely to add to the positives. Robust demand owing to solid U.S. housing market fundamentals and Masco’s differentiated portfolio of leading repair and remodel brands and along with enough liquidity bode well. Although Masco's shares have underperformed the industry in the year-to-date period, earnings estimates for 2021 have increased in the past 30 days, depicting analysts optimism regarding the stocks growth potential. However, rise in raw material costs and expenses related to new product launches, remain potent headwinds.
Over the past four weeks, shares have rallied 9.58%, and there have been 1 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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