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US Equities · Finance research note

MAS — Masco

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 16.53%
Profit Margins 10.9%
Return on Equity 8457.14%
Return on Assets 15.68%
Free Float 0.2B
Dividend Yield 1.60%
Short Int % Utilisation 6.94%

2.2 Growth

Metric Value
Revenue Growth 6.5%
Free Cash Flow 0.74B
EBITDA 12.07 (Ratio)
Enterprise Value 17.48B
EV/Revenue 2.28
EV/EBITDA 12.07

Revenue growth of 6.5% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 9.14%
Risk / Std Dev (Ann.)* 35.42%
1-Year Price Return* 2.53%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $74.33
52-Week Range $58.16 – $83.64
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $7.56B $7.83B
Net income Reported net income $810.00M $822.00M
Total assets Year-end reported balance $5.20B $5.02B
Shareholders’ equity Year-end reported balance $-186.00M $-280.00M
Net margin Net income ÷ revenue 10.71% 10.50%
Asset turnover Revenue ÷ total assets 1.4540x 1.5606x
Equity multiplier Total assets ÷ shareholders’ equity -27.9624x -17.9143x
ROE Net margin × asset turnover × equity multiplier -435.48% -293.57%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $7.56B
Prior annual revenue $7.83B
EBIT $1.24B
Tax rate 24.40%
NOPAT = EBIT × (1 − tax rate) $934.42M
Forecast start-growth basis -3.40%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $934.42M
Add: depreciation & amortisation $148.00M
Less: capital expenditure -$156.00M
Less/(add): working-capital cash-flow movement -$76.00M
Current unlevered FCFF $850.42M

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 -3.40% $902.66M $142.97M -$150.70M -$73.42M $821.52M $782.84M
2 -1.92% $885.30M $140.22M -$145.91M -$72.01M $807.61M $698.82M
3 -0.45% $881.33M $139.59M -$143.36M -$71.68M $805.87M $633.19M
4 1.03% $890.36M $141.02M -$142.93M -$72.42M $816.04M $582.22M
5 2.50% $912.62M $144.55M -$144.55M -$74.23M $838.40M $543.16M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.30
Cost of equity 11.84%
Pre-tax cost of debt 3.14%
WACC 10.13%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $11.27B
Implied terminal EV / EBITDA 8.34x
Terminal value as % of enterprise value 68.22%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $3.24B
Present value of terminal value $6.96B
Indicated enterprise value $10.20B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $10.20B
Less: gross interest-bearing debt $3.21B
Add: cash and equivalents $647.00M
Add: affiliate investments $0.00
Less: minority interests $261.00M
Indicated common equity value $7.37B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 210,000,000.00
Share-count basis reported diluted weighted-average shares
Current market price $73.77
DCF indicative value per share $35.08
Indicative value vs. market price -52.44%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 4/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:41:15.837008 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha -18.34% 3.03%
Adjusted R² 0.33 0.44
Annualised residual volatility 27.49% 25.01%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 1.03 (6.34) 1.55 (9.12)
Size (SMB) 1.14 (5.19) 1.00 (4.67)
Value (HML) 0.55 (2.90) -0.16 (-0.74)
Profitability (RMW) NM 0.70 (3.90)
Investment (CMA) NM 1.36 (4.39)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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