Masco Corporation MAS is scheduled to report third-quarter 2021 results on Oct 27, before the opening bell.

In the last reported quarter, the company’s top and the bottom lines beat the Zacks Consensus Estimate by 0.4% and 9.6% as well as improved 24% and 34% year over year, respectively. Earnings surpassed the consensus mark in each of the trailing six quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for Masco’s third-quarter earnings is pegged at 87 cents per share, implying a decline of 16.4% from the year-ago reported figure of $1.04. The consensus estimate for revenues stands at $2.1 billion, indicating a 6.1% increase from the prior-year reported number.

Masco Corporation Price and EPS Surprise

Masco Corporation price-eps-surprise | Masco Corporation Quote

Factors to Note

Masco’s revenues are likely to reflect the robust performance across Decorative Architectural Products and Plumbing Products segments in the third quarter. Geographically, North America and International markets have been banking on solid demand from the housing industry, in turn benefiting the company.

The business is highly focused on housing, and repair and remodeling (R&R) activities. With the opening of the economy, demand for housing and building material products has been improving, given the increasing trend of consumers to invest more in homes amid the pandemic. The North American R&R market is likely to have performed well in the quarter to be reported on the back of the above-mentioned tailwinds.

It has been enhancing its existing portfolio via regular acquisitions, which might have allowed the company to carry out operational improvements. In the second quarter, its Delta brand acquired a leading manufacturer of residential steam bath products, namely Steamist. This acquisition will complement Masco’s strong trade and e-commerce product offerings, and is likely to have aided its performance in the third quarter.

Yet, the bottom line is likely to have been hurt by intense inflationary pressure. The overall industry has been experiencing material availability and supply-related issues that have been driving cost inflation. The company expects selling, general and administrative expenses, as a percentage of sales, to increase in the third as well as fourth quarters. Apart from raw material costs, it has been incurring expenses related to product launches.

The Zacks Consensus Estimate for Plumbing Products’ sales of $1,280 million indicates a 12.2% improvement from the year-ago reported figure. Yet, the same for adjusted EBITDA is currently pegged at $236 million, which implies a decrease of 19.2% from $292 million reported in the year-ago period.

The consensus mark for the Decorative Architectural Products segment’s sales is currently pegged at $825 million, implying a 2% decrease from the year-earlier reported number. The same for adjusted EBITDA is pegged at $140 million, implying a decrease of 21.1% from the prior-year reported figure.

Geographically, the consensus mark for North America sales is currently pegged at $1,638 million, implying a 2.4% rise from the prior-year quarter. The same for International sales is pegged at $440 million, suggesting growth of 14.6% from the year-ago quarter’s reading.

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. Unfortunately, this is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, it has a Zacks Rank #4 (Sell) and an Earnings ESP of +3.21%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to beat on earnings in their respective quarters to be reported.

KBR, Inc. KBR has an Earnings ESP of +24.90% and a Zacks Rank #2 at present.

Jacobs Engineering Group Inc. J has an Earnings ESP of +13.50% and a Zacks Rank #2.

Installed Building Products, Inc. IBP has an Earnings ESP of +33.60% and a Zacks Rank #3, currently.

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Masco Corporation (MAS) : Free Stock Analysis Report

KBR, Inc. (KBR) : Free Stock Analysis Report

Installed Building Products, Inc. (IBP) : Free Stock Analysis Report

Jacobs Engineering Group Inc. (J) : Free Stock Analysis Report

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