Jefferies retained its Hold rating on Masco and kept a $74.00 price target after the company's latest quarterly report, which included a stronger-than-expected performance from its plumbing business. At the time of the report, Masco shares were trading at $76.16, modestly above Jefferies' target and characterized by InvestingPro as appearing overvalued given a price-to-earnings ratio of 18.5 and a relatively high PEG ratio of 4.8.
The plumbing segment posted a 5% year-over-year increase in sales, outperforming a 2% growth projection in the market. Currency movements accounted for 2 percentage points of that rise, leaving organic sales up 3%. Regionally, North American sales expanded 4% in local currency terms, while international sales rose 1%.
Despite the sales gain, plumbing EBIT margins narrowed by 50 basis points year-over-year to 16.3%, though that result still exceeded consensus estimates of 15.6%. Company commentary and reported drivers point to cost-savings measures and pricing actions as the primary contributors to margin resilience, with those gains partly offset by tariffs, elevated commodity costs, and lower volumes.
On liquidity, InvestingPro data indicate Masco's current ratio stands at 1.88, suggesting the company retains liquid assets that comfortably exceed short-term obligations. That balance-sheet picture accompanies operational decisions the company has already taken, including a high-single-digit percentage price increase implemented in January.
Management provided guidance for plumbing sales to grow in the low single digits on a full-year basis after reflecting the impact of Liberty Hardware. The company expects plumbing EBIT margins to be approximately flat year-over-year at around 18% on that basis.
Looking ahead, Masco plans to integrate Liberty Hardware, previously reported within its DAP segment, into Delta in 2026. The move is part of the company’s segment realignment strategy and is expected to be reflected in future segment reporting.
Operationally, the plumbing segment's EBIT improved 2% year-over-year in the fourth quarter, a recovery from a 16% decline reported in the third quarter. Company statements attribute this sequential improvement to pricing and cost actions that helped blunt the effects of tariffs.
In the broader quarterly results, Masco reported fourth-quarter 2025 earnings per share of $0.82, beating analyst expectations of $0.79 by 3.8%. Revenue for the quarter came in at $1.79 billion, below the anticipated $1.82 billion. The company nonetheless experienced a positive market reaction following the release, which the company and market commentary link to confidence in operational execution.
These mixed signals - a sales beat in plumbing and an EPS beat, offset by a revenue shortfall and margin compression relative to prior-year levels - frame the analyst stance. Jefferies' Hold call reflects a judgment that, despite selective strengths in the plumbing business, the stock's current price and broader financial metrics do not yet justify an upgrade.
Investors will continue to monitor plumbing sales trends, margin trajectory, the impact of pricing and cost programs, and the execution of the Liberty Hardware integration as the company moves through the fiscal year.
Key points
- Masco's plumbing sales rose 5% year-over-year, beating the 2% market expectation, with 2 percentage points from currency and 3 points organic growth.
- Plumbing EBIT margins contracted 50 basis points to 16.3% but outperformed consensus of 15.6% due to cost savings and pricing; tariffs, higher commodity costs, and lower volumes weighed on margins.
- Jefferies maintained a Hold rating with a $74.00 target while Masco traded at $76.16; InvestingPro metrics show a P/E of 18.5, PEG of 4.8, and a current ratio of 1.88.
Risks and uncertainties
- Tariff exposure and higher commodity costs could further pressure margins - this primarily affects industrial and building-products sectors.
- Lower volumes in plumbing products present a sales and margin risk if pricing and cost actions do not fully offset demand weakness - impacting construction and renovation markets.
- Integration risk tied to moving Liberty Hardware from DAP into Delta in 2026 could affect reported results and segment comparability during the transition period.