Masco Corporation (MAS)

Conclusion

Masco Corporation is a North American building products maker, with plumbing brands such as DELTA and HANSGROHE and a decorative architectural paints business. On 9 November 2026 the share traded at 85.92 USD, giving a market capitalisation of 16.56 billion USD.

The verdict is fair. The fair value band runs from 67.65 to 101.47 USD with a midpoint of 84.56 USD, giving a margin of safety of -1.6% at the current price. The DCF gives 76.01 USD per share, and the fair value from historical multiples is 93.10 USD. Against their own ten-year medians, the price-to-earnings ratio of 17.9x sits at a premium of -16.1% (median 21.3x), and the price-to-free-cash-flow ratio of 12.1x at -36.1% (median 18.9x). The enterprise value to EBITDA of 12.6x is at a premium of 2.2% (median 12.3x). The reverse DCF implies revenue growth of 2.8% a year, against five-year revenue growth of 1.0% and five-year free cash flow per share growth of 5.4%.

What holds the case up is the return on invested capital of 43.3% against a WACC of 9.7%, free cash flow conversion of 147.9% over the last twelve months, and a five-year share count change of -4.5% a year. What would break it is three-year revenue growth of -4.5% a year, the next-year earnings estimate growth of -0.4%, and an Ohlson-based insolvency risk of medium, at about 6.1%.

Financial health

Financial strength is green, held up by four good readings and no bad ones. The current ratio is 1.83 and the quick ratio 1.12. Net debt to EBITDA is 1.86x and interest coverage is 13.0x on a trailing twelve-month basis. Debt to equity is not available because the company reports negative shareholders' equity. The Altman Z-score is 4.16, in the safe zone; the model was designed for manufacturers, and Masco is a manufacturer of building products, so the reading applies. Insolvency risk: medium, about 6.1% by the estimate of the Ohlson model over one to two years. That estimate is not a near-term default forecast, but it is higher than the Altman reading suggests, and it reflects the negative equity position.

Earnings quality

Earnings quality is green, with two good readings, one neutral and the Beneish M-score not available. Free cash flow conversion is 147.9% on a trailing twelve-month basis and 115.1% over five years. The accrual ratio is -4.2%, meaning cash earnings exceed reported earnings. Stock-based compensation is 0.4% of revenue, and free cash flow after it is 1.34 billion USD. The share count fell at a compound 4.5% a year over five years, consistent with buybacks. The Piotroski score is 6 out of 9. Over the last eight quarters, the company beat estimates six times and missed twice, with an average surprise of 9.8%. Current-year estimates rose 4.1% over 90 days, with 19 upward revisions and none downward in the last 30 days. Next-year estimates rose 0.8% over 90 days, but the next-year earnings growth estimate is -0.4%.

Profitability

Profitability is green, with all four readings good. The gross margin is 37.5% against a ten-year median of 34.4%, and the operating margin is 18.0% against 16.3%. The net margin is 12.1% against 9.6%. The operating margin stability measure is 11.3%. Return on invested capital is 43.3% against a WACC of 9.7%, and the given difference of 33.6% indicates value creation. The five-year median return on invested capital is 35.4%. Return on equity is not available because equity is negative. The DuPont split shows why: a net margin of 10.7%, an asset turnover of 1.45x and an equity multiplier of 69.3x. Leverage of that size inflates any return on equity figure, so return on invested capital is the more reliable measure here.

Growth

Growth is yellow: one good reading, two neutral and one bad. Revenue has compounded at -4.5% a year over three years, 1.0% over five years and 0.6% over ten years. Earnings per share compounded at 2.1% over three years, 10.7% over five and 14.0% over ten. Free cash flow per share compounded at 15.8% over three years, 5.4% over five and 10.0% over ten. Revenue grew in six of the ten comparable years. The next-year earnings growth estimate of -0.4% is the weakest forward signal, so the strong long-run earnings record is not carried into the near term by analysts.

Valuation

Valuation is yellow, with one neutral reading and the verdict is fair. The price-to-earnings ratio of 17.9x is at a premium of -16.1% to its ten-year median of 21.3x. The price-to-free-cash-flow ratio of 12.1x is at -36.1% against a median of 18.9x. The enterprise value to EBITDA ratio of 12.6x is at 2.2% against 12.3x, and the price-to-sales ratio of 2.16x is at 13.3% against 1.91x. The DCF gives 76.01 USD per share using a discount rate of 10.95% and a terminal growth of 2.5%. The fair value is an order-of-magnitude estimate built on fixed assumptions, not a price target. The reverse DCF implies growth of 2.8%, a gap of 1.7% to five-year revenue growth. The dividend yield is 1.5%, the forward yield 1.6%, and the payout on free cash flow 18.6%.

Risks

Negative shareholders' equity means leverage is not fully captured by the usual ratios: debt to equity and return on equity are not available. Medium insolvency risk, at about 6.1% by the Ohlson estimate, would become more serious if free cash flow weakened, because the company relies on cash generation to service its debt. Three-year revenue contraction at -4.5% a year, if it continues, would pressure margins and the cash flow that supports the valuation. A next-year earnings estimate of -0.4% means the current growth assumption is not supported near term. The Beneish M-score is not available, so the risk of earnings manipulation cannot be tested here. This analysis has no debt maturity schedule and no revenue split by segment, so refinancing risk and the performance of the plumbing and paints businesses cannot be assessed separately.