Is it time to consider buying Masco Corporation (NYSE: MAS)?

Today, we’ll take a look at the well-established Masco Corporation (NYSE: MAS). Shares of the company have received a lot of attention due to a substantial price movement on the NYSE over the past few months, rising to US$68.32 at one point and falling to US$49.17. Certain movements in the stock price can give investors a better opportunity to get into the stock and potentially buy at a lower price. One question to answer is does Masco’s current price of US$50.93 reflect the true value of the large cap? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at Masco’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Masco

What is the opportunity at Masco?

Masco is currently expensive based on my multiple price model, where I look at the company’s price-earnings ratio against the industry average. In this case, I used the Price/Earnings (PE) ratio since there is not enough information to reliably predict the stock’s cash flow. I find Masco’s ratio of 29.67x to be higher than its average of 20.38x, suggesting the stock is trading at a higher price relative to the construction industry. But is there another opportunity to buy cheap in the future? Since Masco’s stock price is quite volatile, this could mean that it may go down (or up even more) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator of how the stock is doing relative to the rest of the market.

What kind of growth will Masco generate?

NYSE: MAS Earnings and Revenue Growth April 23, 2022

Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to more than double over the next two years, the future looks bright for Masco. It seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.

What does this mean to you :

Are you a shareholder? MAS’s upbeat future growth appears to have been factored into the current share price, with the shares trading above industry price multiples. At this current price, shareholders may ask a different question: should I sell? If you think MAS should be trading below its current price, selling at a high price and buying it back when its price falls towards the industry PE ratio can be profitable. But before making this decision, see if its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on MAS for a while, now might not be the best time to get into the stock. The price has outpaced its industry peers, which means there are likely to be no more benefits associated with poor pricing. However, the positive outlook is encouraging for MAS, which means it is worth digging into other factors in order to take advantage of the next price drop.

Keep in mind that when it comes to analyzing a stock, the risks involved should be noted. For example, we found 3 warning signs that you should scan your eye to get a better picture of Masco.

If you are no longer interested in Masco, you can use our free platform to view our list of over 50 other stocks with high growth potential.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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