A Watchlist of Building Suppliers
In an industry with mixed business quality, a handful of names stand out.
James Krapfel: Business quality is mixed across our building-supplier coverage universe. Right now, we give narrow moats to Fortune Brands (FBHS), Masco (MAS), USG (USG), and Lennox (LII), while Mohawk (MHK) and Owens-Corning (OC) do not possess moats, in our opinion. In this somewhat to very commoditized industry, we believe moat sources are most easily attained through intangible assets from brand building as well as cost advantages from company-owned distribution.
We scored Fortune Brands and Lennox the best across our proprietary fundamental framework, which looks at the extent of cyclical catchup opportunities, secular growth prospects, operational execution, and capital allocation.
James Krapfel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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