Last update on 2024-06-07

Masco (MAS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Analyze Masco stock with Piotroski F-Score of 8/9. Discover the financial strengths based on profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 8

We're running Masco (MAS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Masco's Piotroski F-Score is 8 out of 9, reflecting a strong financial position based on profitability, liquidity, and operating efficiency metrics. Key highlights include a positive net income of $908 million, strong cash flow from operations of $1.413 billion, rising ROA, and a decrease in outstanding shares, all indicating robust earnings quality and financial health. However, areas of concern include a slight decrease in leverage and a drop in the Asset Turnover ratio, suggesting room for improvement in these areas.

Insights for Value Investors Seeking Stable Income

With a high Piotroski F-Score of 8, Masco appears to be a strong and potentially undervalued investment opportunity. The company's performance in key areas such as profitability, liquidity, and operational efficiency makes it an attractive option. Investors might want to consider Masco for their portfolios, though they might also keep an eye on the company's leverage and Asset Turnover for any negative trends.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Masco (MAS)

Company has a positive net income?

The net income criterion assesses whether the company was profitable in the most recent fiscal year. Positive net income signifies profitability, while negative net income indicates a loss.

In 2023, Masco (MAS) reported a net income of $908 million. This indicates that Masco was profitable in the most recent fiscal year. Historically, Masco has oscillated between positive and negative net income over the past 20 years. For example, during the 2009 global financial crisis and in 2010, the company experienced significant losses (-$391 million and -$1.043 billion, respectively). Since 2013, except for occasional dips, Masco has generally maintained positive net income. The positive net income of $908 million in 2023 continues this recent trend and earns Masco 1 point in the Piotroski F-Score criterion. This is perceived as a good trend, showcasing the firm’s stability and ability to generate profit.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a measure of the cash generated by a company's regular operating activities, crucial for assessing liquidity.

For Masco (MAS), the Cash Flow from Operations (CFO) in 2023 is $1,413,000,000, indicating positive cash flow. Historically, the operating cash flow for Masco over the past 20 years has been somewhat volatile, with significant lows in the late 2000s and a gradual recovery and stabilization since 2010. The positive CFO in 2023 aligns well with the general uptrend observed over the past decade. Thus, Masco earns a point for demonstrating strong operational cash generation.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) criterion examines the efficiency with which Masco is utilizing its assets to generate profits, comparing yearly metrics for trend analysis.

Masco’s ROA increased from 0.1568 in 2022 to 0.1721 in 2023. This 1.53 percentage point increase is a favorable turn for the company, demonstrating improved efficiency in utilizing its assets to generate profits. When viewing the last 20 years of data, although Masco's performance in 2023 shows improvement, it's generally underperforming compared to the industry median ROA, which stands at 0.3242 in 2023. Hence, while the trend is positive for this period, suggesting better internal efficiency, Masco still has room for progress to meet or surpass industry standards. For this criterion, Masco will earn 1 point as there was observable improvement year-over-year.

Operating Cashflow are higher than Netincome?

Compare the Operating Cash Flow with the Net Income. If the Operating Cash Flow is higher, it adds 1 point. This criterion is important for gauging earnings quality.

For the fiscal year 2023, Masco's (MAS) Operating Cash Flow stands at $1.413 billion whereas its Net Income is $908 million. The Operating Cash Flow exceeding the Net Income by $505 million is indicative of robust earnings quality. A higher Operating Cash Flow as compared to Net Income is generally perceived positively, suggesting that the company is effectively converting its net income into cash. For Masco, this criterion adds 1 point to its Piotroski Score.

Liquidity of Masco (MAS)

Leverage is declining?

Change in Leverage examines the change in the company’s financial risk and long-term stability

The Leverage for Masco has increased from 0.6171 in 2022 to 0.5970 in 2023, signifying a slight decrease. However, the overall trend over the past 20 years shows fluctuations with several peaks, such as in 2008 (0.4128) and 2022 (0.6171). This indicates periods of varying financial risk. Decreasing leverage is seen as favorable, resulting in a score of 0 for this criterion due to an increase this year.

Current Ratio is growing?

The Current Ratio is a liquidity metric that measures a company's ability to cover its short-term obligations with its short-term assets. A higher ratio indicates better liquidity and financial health.

The Current Ratio for Masco (MAS) increased from 1.5596 in 2022 to 1.685 in 2023. This incremental rise signifies improved liquidity, suggesting that Masco is better positioned to cover its short-term liabilities with its short-term assets. Historically, Masco's Current Ratio fluctuated, peaking at 2.3295 in 2010 and hitting a low of 1.328 in 2015. Comparatively, the industry median for 2023 is 2.1975, indicating that Masco still lags behind its peers. Nevertheless, the improvement from 2022 to 2023 earns a point in Piotroski score metric, affirming a positive trend.

Number of shares not diluted?

Change in the number of shares outstanding is a significant criterion in the Piotroski Score as it can indicate whether a company is issuing more shares, which may dilute existing shareholders' value, or repurchasing shares, which can indicate confidence in the company's financial health.

In 2023, Masco's outstanding shares decreased from 231,000,000 in 2022 to 225,000,000. This decrease in shares is a positive trend and aligns well with the Piotroski criterion, giving it a score of 1. Over the last 20 years, Masco has consistently reduced its outstanding shares from a high of 491,463,415 in 2003 to the current 225,000,000 in 2023. This steady reduction indicates a strong and consistent share buyback program, which is generally viewed favorably by investors as it often reflects company confidence and is aimed at increasing shareholder value.

Operating of Masco (MAS)

Cross Margin is growing?

Gross margin is an indicator of a company’s financial health and efficiency in terms of production and operations.

Masco's gross margin increased from 0.3126 in 2022 to 0.356 in 2023, indicating an upward trend. This improvement reflects greater efficiency and potentially lower costs or higher pricing power. Compared to the industry median that sits at 0.3242 in 2023, Masco's gross margin not only improved but also stands out, demonstrating stronger profitability relative to competitors. Over the last 20 years, Masco has outperformed the industry median consistently with a few fluctuations, which reinforces its competitive advantage. Thus, Masco scores 1 point for the increase in gross margin in 2023.

Asset Turnover Ratio is growing?

Asset Turnover evaluates how efficiently a company uses its assets to generate sales. An increasing Asset Turnover indicates improved efficiency.

The Asset Turnover ratio for Masco (MAS) in 2023 was 1.51, down from 1.6131 in 2022. This decrease indicates that Masco was less efficient in using its assets to generate sales in 2023 compared to 2022. Thus, for the Piotroski analysis, Masco earns 0 points for this criterion. Looking at the Asset Turnover trends from 2003 to 2023, the ratio has generally improved over the years, demonstrating stricter asset management post-financial crisis of 2008-2009 and through various economic cycles. However, the recent decline suggests potential inefficiencies or increased assets that did not correspondingly boost sales.