Masco Earnings: Profit Margins Continue To Impress Despite Lower Sales Volumes

In February 2023, management unveiled Masco’s 2023 outlook, which envisioned a 10% decline in revenue and a 60-basis-point compression in adjusted operating margin to 15%. We thought this guidance could prove conservative. Through the first half of 2023, Masco is tracking toward a 10% revenue decline, but profit margins have been much better than we expected. Indeed, the firm is on track to realize solid margin expansion this year, and management is now targeting a 16% adjusted operating margin. We’ve raised our fair value estimate approximately 1% to $72 per share due to modest upward revisions to our near-term profit margin outlook.