# Masco (MAS)

Sector: Building products

| Field | Value |
|---|---|
| Price | $72.03 |
| Fair value (Analysts) | $81.00 |
| Discount to fair value | 11.1% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | Wide |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2.55 |
| Data as of | 2026-10-15 |
| Next earnings | 2026-10-28 (confirmed) |

## In short

Masco's North American sales fall as remodeling cools, and a one-time tariff refund hides it, so sales must grow again in 2027 for the gap to close.

## Themes and gap

- Themes: Weak consumer (weak-consumer), Interest rates (interest-rates), Tariffs and trade (trade-tariffs)
- Gap type: Can close (closable)
- Why: The October 28, 2026 report and the 2027 outlook in February 2027 show whether North American sales grow again.

## About

Masco designs, makes and sells branded home improvement and building products. It reports two segments: Plumbing Products and Decorative Architectural Products. Plumbing Products includes Delta and hansgrohe faucets, bath and shower fixtures, Liberty hardware and HotSpring spas. Decorative Architectural Products includes Behr paint. Masco makes money from the margin on these products. Its sales depend mostly on residential repair and remodel spending, and less on new home construction. Net sales were $1.99 billion in Q2 2026, and about 78% of them were in North America.

## Thesis

The market discounts Masco because its North American sales are falling while US repair and remodel spending cools. In Q2 2026, net sales fell 3%, and North American sales fell 5% in local currency. Adjusted EPS grew 26%, but a one-time benefit of about $95 million from tariff refunds drove much of the growth. Investors looked through the refund to the weaker sales, and the stock fell 11.1% on July 29, 2026, the day of the report. Several analysts then cut their price targets, and one said that the return on Masco's new growth investments is not clear. Mortgage rates near 7.5% in September 2026 keep home sales low, and fewer home sales mean less remodeling and less paint demand. For the gap to close, North American sales must stop falling and grow again in 2027, and the operating margin must stay high without the tariff refunds. Masco must also keep its buybacks, which used $592 million in the first half of 2026, without a large rise in debt. The first test is the Q3 2026 report on October 28, 2026, and the 2027 outlook in February 2027. If volumes recover, the gap can close over the next four to six quarters. If the housing market stays weak, the discount can last into 2028.

## Checkpoints

- Oct 28, 2026: Q3 2026 results: North American sales. Status: Pending. Watch: North American sales that are flat or up in local currency and an adjusted operating margin near Q2 without new tariff refunds pass; another fall in North American sales or a cut to the 2026 outlook fails.
- Feb 2027 (estimate): Full-year 2026 results and 2027 outlook. Status: Pending. Watch: A 2027 outlook with sales growth and adjusted EPS above 2026 without the tariff refunds passes; an outlook of falling sales fails.

## Balance sheet

- Cash: $548M
- Debt: $3.2B
- Net debt: $2.7B
- EBITDA, last 12 months: $1.5B
- Net debt / EBITDA: 1.8× (low)
- Interest cover: 15×
- Undrawn credit line: $1.0B, to March 2031
- Debt due within 12 months: $2.0M

Masco funds itself with unsecured notes and a term loan of the parent company. At June 30, 2026, long-term debt was $3.245 billion and notes payable were $2 million. Debt includes $300 million borrowed on a delayed draw term loan of up to $500 million, signed on April 21, 2026 and due April 21, 2028, at 4.499%. EBITDA is operating profit plus depreciation and amortization for the 12 months to June 30, 2026, and it includes the one-time tariff refund of about $95 million. Interest cover is operating profit divided by interest expense for the first six months of 2026. On March 20, 2026, Masco signed a new $1.0 billion revolving credit facility that ends on March 20, 2031, and nothing was drawn on it at June 30, 2026. Its covenants limit net leverage to 4.0 times and require interest cover of at least 2.5 times. Total liabilities of $5.52 billion were larger than total assets of $5.40 billion. In the first six months of 2026, Masco bought back $592 million of shares and paid $129 million of dividends, more than its operating cash flow of $417 million, and it borrowed $300 million on the term loan.

As of 2026-06-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/62996/000006299626000027/mas-20260630.htm
- https://www.sec.gov/Archives/edgar/data/62996/000006299626000026/a630268-kex99.htm

## Recent events

- 2026-09-28: Masco said that it will release Q3 2026 results on October 28, 2026, before its conference call at 8:00 a.m. ET.
- 2026-09-15: Masco appointed Yaron Ben David as Chief Technology and AI Officer, effective September 15, 2026.
- 2026-08-12: Masco declared a quarterly dividend of $0.32 per share, payable on August 28, 2026.
- 2026-07-29: Masco reported Q2 2026 results. Net sales fell 3% to $1.99 billion, and North American sales fell 5% in local currency. Adjusted EPS grew 26% to $1.64, helped by a net benefit of about $95 million from tariff refunds. Masco raised its 2026 adjusted EPS outlook to $4.40 to $4.60, from $4.10 to $4.30, because of the refunds. The stock fell 11.1% that day, and Evercore ISI cut its rating to In Line.
- 2026-07-27: Masco completed a $300 million accelerated share repurchase that it started in May 2026, under the $2.0 billion buyback authorization that the board approved on February 10, 2026. It received about 4.1 million shares in total.
- 2026-04-21: Masco announced that Jai Shah, Group President of Plumbing and Wellness, will leave the company on July 3, 2026.
- 2026-04-21: Masco signed a two-year delayed draw term loan of up to $500 million, due April 21, 2028. It had borrowed $300 million of it at June 30, 2026.

## Risks

- High: Masco's sales depend on US repair and remodel spending and on DIY paint demand. Mortgage rates near 7.5% in September 2026 keep home sales low, and North American sales fell 5% in Q2 2026. If this lasts, volumes and margins fall.
- Medium: Masco imports many plumbing products, and tariffs, mainly on goods from China, raise its costs. The 2026 profit includes a one-time net benefit from tariff refunds of about $85 million for the full year, which will not repeat.
- Medium: Masco sells through a small number of large home centers and wholesalers. The loss of shelf space or a change in a large customer's orders would lower sales.
- Low: Masco spends on growth investments and buybacks while sales fall. Total liabilities were larger than total assets at June 30, 2026. If cash flow falls, Masco may need to cut buybacks or borrow more.

## Links

- Page: https://picks.kamadorueda.com/company/MAS/
- History of changes: https://picks.kamadorueda.com/company/MAS/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/MAS.json

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