Masco

Masco reported a 3% decline in second-quarter revenue, as plumbing sales fell 3% and decorative architectural sales declined 4%. Management reinstated its 2026 revenue guidance, forecasting a low-single-digit increase, and raised adjusted EPS guidance by 7% at the midpoint to $4.40-$4.60 per share.

Why it matters: Shares plummeted 11% after Masco reported disappointing second-quarter results, as continued weakness in the North American repair and remodel market weighed on both plumbing and paint sales. Although margins and adjusted EPS increased sharply, much of the improvement came from a roughly $95 million tariff-refund benefit rather than underlying efficiency gains. Do-it-yourself sales fell by a high-single-digit percentage, reflecting the prolonged downturn in the DIY paint market rather than Behr losing ground to competitors. We expect volumes to pick back up as existing home sales eventually improve. Plumbing sales declined against a difficult prior-year comparison and sluggish demand environment, while a one-time strategic investment weighed on the segment’s profit this quarter.

The bottom line: We are maintaining our $81 fair value estimate for wide-moat Masco, as our long-term outlook remains unchanged. Following the decline in shares July 29, the stock trades at roughly a 10% discount to our valuation. Masco’s flagship brands, including Behr in decorative paint and Delta and Hansgrohe in plumbing, benefit from strong brand recognition across their respective channels. We believe this brand strength should help Masco withstand the current difficult demand environment. As consumer confidence improves and interest rates decline, we forecast that Masco will return to consistent mid-single-digit revenue growth while maintaining a high-teens operating margin.

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We are lowering our fair value estimate for Masco to $81 per share from $88. Over our 10-year forecast horizon, we continue to expect solid growth and profitability, with consolidated revenue forecast to grow at a 4.5% compound annual rate and adjusted operating margin averaging around 17.7%. Our revised fair value estimate equates to 19.3 times our 2026 adjusted earnings per share and a forward EV/EBITDA multiple of around 12.3 times.

We expect 2026 to be another challenging year for Masco. Given the company’s product mix, we forecast low-single-digit revenue growth in the plumbing business and relatively flat paint sales, resulting in overall revenue growth of 1.8%. We expect adjusted operating margin to improve to 17% as pricing actions and cost savings initiatives partially offset higher commodity costs.

Both of Masco’s segments are heavily exposed to the repair and remodel market, and the products sold are typically lower-ticket items within broader home renovation projects. Demand was pulled forward during the pandemic period as homeowners invested more in their living spaces, but since 2023, revenue has softened due to macroeconomic uncertainty, weaker consumer confidence, and higher interest rates. Looking ahead, we expect demand to recover in the medium term, supported by several structural tailwinds. US homeowner equity has risen significantly, up more than 80% since 2019, providing greater financial capacity for renovation activity. At the same time, the US housing stock continues to age, with over 55% of homes now more than 40 years old, a period typically associated with higher repair and remodeling spending. Pent-up demand for these projects is building and should materialize as consumer confidence improves, interest rates decline, and existing home turnover increases, driving a recovery in repair and remodel activity.

Over our 10-year forecast period, we expect plumbing products to grow at a compounded annual rate of 4.8% and decorative architectural products at 3.7%, benefiting from structural tailwinds in the repair and remodel market. We also model modest operating margin improvement with plumbing segment margins averaging 18.1% and decorative architectural margins averaging 18.7% as near-term commodity input inflation headwinds subside and home repair needs normalize.

The second stage of our valuation model assumes Masco can generate an average of 27.5% return on new invested capital and 5.5% earnings before interest growth (implying a 20% reinvestment rate) for 10 years after our 10-year explicit forecast period.

We assign Masco a wide moat rating based on intangible assets, and we believe the firm should be able to generate economic returns above the weighted average cost of capital for at least the next 20 years. We estimate return on invested capital to average 34.3% over our 10-year forecast period, which is well above our weighted average cost of capital of 8.2%.

We assign the plumbing products segment (which accounts for roughly 70% of Masco’s total sales) a wide moat rating based on intangible assets. The products in this segment include faucets, showerheads, sinks, and other kitchen and bath accessories that are distributed through a broad network of home center retailers, online platforms, and wholesale channels. The segment is supported by a portfolio of brands positioned across distinct price points, including Brizo and Hansgrohe at the luxury end, Delta as the core midmarket offering, and Peerless in the value segment, allowing Masco to capture a broad range of customer demand.

Within the kitchen and bath fixtures market, competition is concentrated among a few scaled players, with Kohler, Fortune Brands Innovations’ Moen, and Masco’s Delta collectively accounting for roughly 40% of the market. Delta has consistently ranked among the top three brands in Zonda’s Builder Brand Use Study and is particularly well established with homebuilders. Faucets and showers are highly visible to homebuyers but represent only a small portion of total construction costs, giving builders an incentive to procure trusted, higher-quality brands that can improve the perceived value of a home. The segment also benefits from relatively stable end-market exposure, with roughly 84% of sales tied to repair and remodel activity. This makes demand less cyclical than for products more heavily exposed to new construction, as many fixture purchases are driven by replacement needs and are less discretionary.

We believe the strength of the Delta and Hansgrohe brands gives Masco meaningful pricing power relative to lower-end competitors, as demonstrated by its consistent ability to generate positive price/cost spreads.

We assign Masco’s decorative paint segment a wide moat rating, underpinned by intangible assets centered around the Behr paint brand. The US architectural coatings market is highly consolidated, with Behr (Masco), Sherwin-Williams, PPG, and Benjamin Moore accounting for roughly 85% of industry revenue. Behr is the second largest brand in the DIY coatings market behind Sherwin-Williams, with approximately 25% market share in 2025. The brand has also gained traction in the professional painter market, increasing its share by more than 200 basis points since 2019, albeit still representing less than 10% of that market.

We believe two main factors support Behr’s moat. First, the brand has built strong recognition among DIY consumers and is slowly gaining share among professional painters, supporting repeat purchases and pricing power. Second, Behr benefits from an exclusive relationship with Home Depot, which accounted for approximately 96% of Behr’s sales in 2025. This partnership provides unparalleled scale, visibility, and shelf dominance within a high-traffic retail channel and limits direct competition at the point of sale.

Behr has built a reputation as a high-quality paint brand at a reasonable price, particularly among DIY consumers. In the 2025 J.D. Power Paint Satisfaction Study, Behr ranked second in both interior and exterior paint (closely trailing Sherwin-Williams). The brand scored highly on key attributes such as ease of application, durability, and product variety, underscoring its strength across both functional performance and design. Behr has also been named the most trusted paint brand by Lifestory Research for five consecutive years (2022–26).

Behr has a long-standing, symbiotic relationship with Home Depot. From Masco’s perspective, Home Depot’s market leadership and wide moat provides a large and stable sales channel for Behr products. Home Depot operates over 2,300 stores across North America, giving it a dense footprint and making its locations highly accessible to customers. While PPG’s Glidden brand is also sold at Home Depot, it is positioned as a lower-cost alternative and receives meaningfully less shelf space and visibility. For context, in 2025, Behr represented roughly 80% of paint sales at Home Depot. It also provides pricing stability as Masco is able to pass through raw material cost inflation to its customers. Masco has additionally leveraged this partnership to deepen its broader presence in other categories, with brands such as Delta also benefiting from strong shelf presence within Home Depot.

From Home Depot’s perspective, having an exclusive brand like Behr helps drive traffic, increase customer spending, and strengthen its position in paint. Home Depot has also been pushing into the professional painter and contractor category and Behr plays an important role in this strategy, especially since it does not compete through its own store network. That said, we are more cautious about Behr’s growth in the pro paint market and expect most share gains to come from general contractors already sourcing other supplies through Home Depot, or professional painters currently using smaller regional paint brands. We think most painters will continue to favor established brands due to familiarity and perceived quality difference. Overall, we estimate Behr’s pro paint market share will expand to roughly 10% by 2030, up about 100 basis points from 2025.

The repair and remodel market benefits from durable secular tailwinds, including an aging housing stock, rising homeowner equity, and favorable long-term demographic trends.

Masco’s portfolio is concentrated in lower-ticket, non-discretionary categories, supporting more resilient demand relative to new construction-exposed peers.

Masco's brand portfolio enjoys pricing power, which supports margin stability.

Weak consumer confidence and elevated economic uncertainty could weigh on repair and remodel activity, creating a headwind to Masco’s revenue growth and margins.

The Behr brand has historically been more DIY-focused and less entrenched with professional painters, which may constrain share gains in the pro segment relative to peers.

Raw material cost volatility and tariffs can pressure margins, particularly if pricing lags cost inflation.