MAS
Masco Corporation
$72.56
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 12.2% above fair value
You pay
$72.56
Bear
$47.41
Fair
$64.65
Bull
$81.89
Bear
$47.41
-34.7%
$3.76 × 14x + net cash
Fair
$64.65
-10.9%
$3.76 × 18x + net cash
Bull
$81.89
+12.9%
$3.76 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.76)
Implied Market Multiple
19.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $83.90 from 38 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $64.65 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $83.90 (from 38 analysts). Our estimate is 33% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing