Construction Products Supplier Masco Builds A Winner

Although rebounding construction and home-renovation markets have gone through some swings in recent months, most of the news has been pretty good.

That bodes well for companies that supply products to the building industry, whether you're talking about nail manufacturers or makers of high-end heating and air-conditioning systems.

It's especially good for companies that provide a wide range of products to a wide range of markets. One of those companies is Masco (NYSE:MAS), whose product lineup includes everything from cabinetry and paint to faucets, windows, fasteners, decorative hardware, coating systems and hot tubs. It also provides installation and other services.

Familiar Brands

The name "Masco" might not ring a bell. But chances are you know some of its brands, which include Behr paint, Delta faucets and KraftMaid cabinets.

The company's website lists 20 different companies under its corporate umbrella. It sells its products directly to dealers, through wholesale channels and at home-improvement retailers such as Home Depot (NYSE:HD) and Lowe's (NYSE:LOW).

Rebounding construction markets in North America and elsewhere have helped Masco run off 13 straight quarters of double- or triple-digit EPS gains.

It reported 2015 first-quarter results on April 28. Though the performance didn't blow anybody's socks off — Masco met consensus earnings views but fell short on revenue — the company's stock price still rose 2.5% to 26.94 on the day it posted Q1 results. Shares hit a multiyear high of 27.46 on Monday but have since fallen back and currently trade near 26.

Masco's strong recent stock performance — like the performances of others in IBD's Building-Construction Products/Miscellaneous group, including Mohawk Industries (NYSE:MHK) and Acuity Brands (NYSE:AYI) — is mainly due to bullishness over construction markets, analysts say.

"The entire building-products industry continues to move up," said James Armstrong, analyst at Vertical Research Partners. "People seem to want to invest in housing. They're looking for different ways to do it, and Masco is a stable way to do it."

In a recent note, Zacks Equity Research said demand for Masco's products "has been benefiting from an increase in new home construction and home-improvement activities in North America. The repair and remodel market recovery is also gaining traction. These tailwinds are driving revenue increases."

Masco officials declined to comment for this story. On a Q1 conference call, CEO Keith Allman said his company's expectation is that U.S. housing starts will reach about 1.1 million units this year, down from earlier estimates of 1.3 million to 1.5 million.