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The Company manufactures, distributes and installs home improvement and building products.
Masco (NYSE: MAS) manufactures, distributes and installs home improvement products such as cabinets, plumbing fixtures, and paints. The company has a lot of debt, 45% of real assets. They have more real liabilities than real assets, which means a negative book value. Earnings are also negative, 36 cents to be exact. The company's sales are declining, 4% over the past year and 8% annually for the past 5 years. Earnings have followed, declining 19% annually over the past 5 years. Meanwhile, the operating margin is less than its competitors (1% compared to 8%). Five year Return on Equity is half that of its peers (6% v. 11%). Yet, the company has a lower price to cash flow ratio compared to its peers, 9x v. 14x.
So you ignored intangible assets and goodwill on the balance sheet but not on the income statement? Ignoring these costs earnings have remained positive which is reflected in free cash flows ranging from $554 to $1044 from 2005-2009. Looking at annualized results from a cyclical bottom also presents a very negative picture. The balance sheet is far from perfect and it could take a while for earnings to pick up but as an investor you need to look to the future instead of dwelling the recent negative past.
I don't lend much credence to imaginary assets. They create problems for investors in crashes.A company that has bad management in the past won't do well in the future, relative to its peers. I give a bit of credit for good cash flows, but without earnings, cash flow doesn't do you any good. Someone with a $100k job and $100k in expenses won't do any better for his pension than $50k in each. Same for companies that do the same.Masco recently confirmed my belief that the housing market will be a problem for a long time. I think for a decade.Success,LJL
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