Masco to Report Q2 Earnings: Here's What to Expect

Masco Corporation MAS is slated to report second-quarter 2024 results on Jul 25 before the opening bell.

In the last reported quarter, the company's earnings beat the Zacks Consensus Estimate by 6.9% and rose 8.1% year over year. However, net sales missed the consensus mark by 1.1% and declined 3% year over year.

Masco's earnings topped the consensus mark in the last four quarters, with the average surprise being 16.6%.

The Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged at $1.16 cents in the past 60 days. The estimated figure indicates a 2.5% decline from the year-ago level.

Factors to Note

Masco's second-quarter earnings and net sales are likely to have declined year over year due to continued demand challenges in Europe and China. Additionally, currency fluctuations and economic instability in key markets are expected to have affected sales and the export business.

Segment-wise, our estimates suggest the Plumbing Products (which accounted for 61.9% of first-quarter 2024 total revenues) and Decorative Architectural Products segments' (which accounted for 38.1% in the first quarter) revenues to have declined 0.6% and 2% year over year to $1.22 billion and $884 million, respectively.

The international market is likely to have lagged behind North America, which might have ailed the company's performance. Conversely, North America is likely to have performed stronger attributed to quicker stabilization, as evidenced in past two quarters.

Geographically, our model predicts North America (which accounted for 79.2% of first-quarter 2024 total revenues) and International, mainly Europe (which accounted for 20.8%) revenues to have declined 0.6% and 3.5% year over year to $1.71 billion and $394.5 million, respectively.

Nonetheless, the company's solid brand portfolio, long-term growth initiatives and expansion efforts are expected to have offset the adverse effects of these headwinds. Also, the focus on operational excellence and continuous improvement, along with the development of innovative products in the North American and International Plumbing businesses, are likely to have aided the company's performance in the to-be-reported quarter.

Meanwhile, MAS' bottom line is likely to have been affected by inflationary pressure, impacting production costs. Supply chain disruptions, particularly in the availability and pricing of essential commodities, are anticipated to have further strained Masco's profitability. For the second quarter, our model predicts consolidated adjusted operating margin to decline 140 basis points year over year to 15.7%.

However, a favorable price/cost relationship and cost-saving initiatives are likely to have partially aided the company's bottom line.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Masco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.

Currently, MAS has a Zacks Rank #4 (Sell) and an Earnings ESP of -4.43%.

Stocks With the Favorable Combination

Here are some companies in the Zacks Construction sector that, per our model, have the right combination of elements to post an earnings beat in the respective quarters to be reported.

Aspen Aerogels, Inc. ASPN currently has an Earnings ESP of +23.53% and a Zacks Rank of 1.

ASPN's earnings topped the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 68.2%. Earnings for the second quarter of 2024 are expected to increase by a whopping 122.7% year over year.

EMCOR Group, Inc. EME currently has an Earnings ESP of +4.76% and a Zacks Rank of 3.

EME's earnings for the second quarter are expected to increase 24.8%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 32%.

Dycom Industries, Inc. DY currently has an Earnings ESP of +4.43% and a Zacks Rank of 2.

DY's earnings for the second quarter are expected to increase 7.4%. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining occasion, the average surprise being 30.2%.

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