Will Masco (MAS) Pull a Surprise this Earnings Season?
Zacks Investment Research | Apr 22, 2016 12:27AM ET
Masco Corporation (NYSE:MAS) is set to report first-quarter 2016 results on Apr 26, before the market opens.
Last quarter, the company had posted a positive surprise of 11.54%. Moreover, the company surpassed estimates in three out of the past four quarters, resulting in an average positive surprise of 7.90%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Masco has been witnessing stronger demand for its leading products since the past few quarters, as both the repair and remodeling industry as well as the new home construction industry are improving. This trend is expected to continue in the soon-to-be reported quarter.
Masco’s earnings, revenues and margin increased year over year in 2015. We expect the strong trends in earnings, revenues and margins to continue in the to-be-reported quarter as well.
However, unfavorable foreign currency movements will hurt international revenues
Earnings Whispers
Our proven model does not conclusively show that Masco is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: Masco’s Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 25 cents.
Zacks Rank: Though the company’s Zacks Rank #2 increases the predictive power of ESP, Masco’s ESP of 0.00% makes a surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the broader construction sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Headwaters Incorporated (NYSE:HW) , with an Earnings ESP of +11.11% and a Zacks Rank #1
CEMEX, S.A.B. de C.V. (NYSE:CX) with an Earnings ESP of +28.57% and a Zacks Rank #2
Dycom Industries Inc. (NYSE:DY) with an Earnings ESP of +1.33% and a Zacks Rank #3
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