Intrinsic value of Masco - MAS

Previous Close

$38.30

  Intrinsic Value

$14.38

stock screener

  Rating & Target

str. sell

-62%

  Value-price divergence*

-58%

Previous close

$38.30

 
Intrinsic value

$14.38

 
Up/down potential

-62%

 
Rating

str. sell

 
Value-price divergence*

-58%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MAS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.01
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
Revenue, $m
  7,357
  7,600
  7,863
  8,148
  8,455
  8,783
  9,134
  9,508
  9,907
  10,329
  10,778
  11,253
  11,755
  12,287
  12,848
  13,440
  14,065
  14,724
  15,419
  16,150
  16,921
  17,732
  18,586
  19,484
  20,429
  21,422
  22,467
  23,566
  24,721
  25,935
  27,211
Variable operating expenses, $m
 
  2,688
  2,778
  2,876
  2,981
  3,093
  3,213
  3,342
  3,478
  3,623
  3,777
  3,856
  4,028
  4,211
  4,403
  4,606
  4,820
  5,046
  5,284
  5,535
  5,799
  6,077
  6,369
  6,677
  7,001
  7,341
  7,699
  8,076
  8,472
  8,888
  9,325
Fixed operating expenses, $m
 
  3,891
  3,988
  4,088
  4,190
  4,295
  4,402
  4,512
  4,625
  4,741
  4,859
  4,981
  5,105
  5,233
  5,364
  5,498
  5,635
  5,776
  5,920
  6,068
  6,220
  6,376
  6,535
  6,698
  6,866
  7,038
  7,214
  7,394
  7,579
  7,768
  7,962
Total operating expenses, $m
  6,304
  6,579
  6,766
  6,964
  7,171
  7,388
  7,615
  7,854
  8,103
  8,364
  8,636
  8,837
  9,133
  9,444
  9,767
  10,104
  10,455
  10,822
  11,204
  11,603
  12,019
  12,453
  12,904
  13,375
  13,867
  14,379
  14,913
  15,470
  16,051
  16,656
  17,287
Operating income, $m
  1,053
  1,021
  1,097
  1,185
  1,284
  1,395
  1,519
  1,655
  1,803
  1,966
  2,142
  2,416
  2,622
  2,843
  3,081
  3,337
  3,610
  3,902
  4,214
  4,547
  4,902
  5,280
  5,681
  6,108
  6,562
  7,044
  7,554
  8,096
  8,671
  9,279
  9,924
EBITDA, $m
  1,212
  1,177
  1,256
  1,346
  1,449
  1,563
  1,690
  1,829
  1,982
  2,148
  2,329
  2,524
  2,735
  2,961
  3,205
  3,466
  3,745
  4,044
  4,363
  4,702
  5,065
  5,450
  5,860
  6,295
  6,758
  7,249
  7,770
  8,323
  8,908
  9,528
  10,185
Interest expense (income), $m
  198
  186
  145
  155
  166
  178
  191
  205
  219
  235
  251
  269
  287
  307
  328
  349
  373
  397
  423
  450
  478
  508
  540
  573
  608
  645
  684
  724
  767
  812
  859
Earnings before tax, $m
  830
  835
  952
  1,030
  1,118
  1,217
  1,328
  1,450
  1,584
  1,731
  1,891
  2,147
  2,334
  2,536
  2,754
  2,987
  3,238
  3,505
  3,792
  4,098
  4,424
  4,772
  5,142
  5,535
  5,954
  6,399
  6,871
  7,372
  7,903
  8,467
  9,064
Tax expense, $m
  296
  226
  257
  278
  302
  329
  358
  391
  428
  467
  510
  580
  630
  685
  744
  807
  874
  946
  1,024
  1,106
  1,194
  1,288
  1,388
  1,495
  1,608
  1,728
  1,855
  1,990
  2,134
  2,286
  2,447
Net income, $m
  491
  610
  695
  752
  816
  888
  969
  1,058
  1,156
  1,264
  1,380
  1,567
  1,704
  1,852
  2,010
  2,181
  2,363
  2,559
  2,768
  2,991
  3,229
  3,483
  3,753
  4,041
  4,346
  4,671
  5,016
  5,382
  5,770
  6,181
  6,617

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,191
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,137
  5,307
  5,491
  5,690
  5,904
  6,134
  6,379
  6,640
  6,918
  7,213
  7,526
  7,858
  8,209
  8,580
  8,972
  9,386
  9,822
  10,282
  10,767
  11,278
  11,816
  12,383
  12,979
  13,606
  14,266
  14,960
  15,689
  16,457
  17,263
  18,111
  19,002
Adjusted assets (=assets-cash), $m
  3,946
  5,307
  5,491
  5,690
  5,904
  6,134
  6,379
  6,640
  6,918
  7,213
  7,526
  7,858
  8,209
  8,580
  8,972
  9,386
  9,822
  10,282
  10,767
  11,278
  11,816
  12,383
  12,979
  13,606
  14,266
  14,960
  15,689
  16,457
  17,263
  18,111
  19,002
Revenue / Adjusted assets
  1.864
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
Average production assets, $m
  708
  730
  755
  782
  812
  843
  877
  913
  951
  992
  1,035
  1,080
  1,129
  1,180
  1,233
  1,290
  1,350
  1,414
  1,480
  1,550
  1,624
  1,702
  1,784
  1,870
  1,961
  2,057
  2,157
  2,262
  2,373
  2,490
  2,612
Working capital, $m
  1,474
  296
  307
  318
  330
  343
  356
  371
  386
  403
  420
  439
  458
  479
  501
  524
  549
  574
  601
  630
  660
  692
  725
  760
  797
  835
  876
  919
  964
  1,011
  1,061
Total debt, $m
  2,997
  2,338
  2,504
  2,683
  2,876
  3,082
  3,303
  3,538
  3,788
  4,054
  4,336
  4,634
  4,950
  5,284
  5,637
  6,009
  6,402
  6,816
  7,253
  7,712
  8,197
  8,706
  9,243
  9,807
  10,401
  11,026
  11,683
  12,373
  13,099
  13,862
  14,664
Total liabilities, $m
  5,435
  4,776
  4,942
  5,121
  5,314
  5,520
  5,741
  5,976
  6,226
  6,492
  6,774
  7,072
  7,388
  7,722
  8,075
  8,447
  8,840
  9,254
  9,691
  10,150
  10,635
  11,144
  11,681
  12,245
  12,839
  13,464
  14,121
  14,811
  15,537
  16,300
  17,102
Total equity, $m
  -298
  531
  549
  569
  590
  613
  638
  664
  692
  721
  753
  786
  821
  858
  897
  939
  982
  1,028
  1,077
  1,128
  1,182
  1,238
  1,298
  1,361
  1,427
  1,496
  1,569
  1,646
  1,726
  1,811
  1,900
Total liabilities and equity, $m
  5,137
  5,307
  5,491
  5,690
  5,904
  6,133
  6,379
  6,640
  6,918
  7,213
  7,527
  7,858
  8,209
  8,580
  8,972
  9,386
  9,822
  10,282
  10,768
  11,278
  11,817
  12,382
  12,979
  13,606
  14,266
  14,960
  15,690
  16,457
  17,263
  18,111
  19,002
Debt-to-equity ratio
  -10.057
  4.410
  4.560
  4.720
  4.870
  5.030
  5.180
  5.330
  5.480
  5.620
  5.760
  5.900
  6.030
  6.160
  6.280
  6.400
  6.520
  6.630
  6.740
  6.840
  6.940
  7.030
  7.120
  7.210
  7.290
  7.370
  7.450
  7.520
  7.590
  7.650
  7.720
Adjusted equity ratio
  -0.377
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  491
  610
  695
  752
  816
  888
  969
  1,058
  1,156
  1,264
  1,380
  1,567
  1,704
  1,852
  2,010
  2,181
  2,363
  2,559
  2,768
  2,991
  3,229
  3,483
  3,753
  4,041
  4,346
  4,671
  5,016
  5,382
  5,770
  6,181
  6,617
Depreciation, amort., depletion, $m
  159
  156
  159
  161
  164
  168
  171
  174
  178
  182
  187
  108
  113
  118
  123
  129
  135
  141
  148
  155
  162
  170
  178
  187
  196
  206
  216
  226
  237
  249
  261
Funds from operations, $m
  638
  766
  854
  913
  980
  1,056
  1,140
  1,233
  1,335
  1,446
  1,567
  1,675
  1,817
  1,970
  2,134
  2,310
  2,498
  2,700
  2,916
  3,146
  3,392
  3,653
  3,932
  4,228
  4,542
  4,877
  5,231
  5,608
  6,007
  6,430
  6,878
Change in working capital, $m
  -88
  9
  10
  11
  12
  13
  14
  15
  16
  16
  17
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  50
Cash from operations, $m
  726
  757
  844
  902
  968
  1,043
  1,126
  1,218
  1,319
  1,429
  1,549
  1,657
  1,797
  1,949
  2,112
  2,287
  2,474
  2,675
  2,889
  3,118
  3,362
  3,622
  3,898
  4,193
  4,506
  4,838
  5,191
  5,565
  5,962
  6,383
  6,828
Maintenance CAPEX, $m
  0
  -71
  -73
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -108
  -113
  -118
  -123
  -129
  -135
  -141
  -148
  -155
  -162
  -170
  -178
  -187
  -196
  -206
  -216
  -226
  -237
  -249
New CAPEX, $m
  -180
  -22
  -25
  -27
  -29
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -105
  -111
  -117
  -122
Cash from investing activities, $m
  -124
  -93
  -98
  -102
  -107
  -113
  -118
  -124
  -129
  -136
  -142
  -149
  -156
  -164
  -172
  -180
  -189
  -198
  -208
  -218
  -229
  -240
  -252
  -264
  -278
  -291
  -306
  -321
  -337
  -354
  -371
Free cash flow, $m
  602
  664
  745
  799
  861
  930
  1,008
  1,095
  1,190
  1,294
  1,407
  1,508
  1,641
  1,785
  1,940
  2,106
  2,285
  2,476
  2,681
  2,900
  3,133
  3,381
  3,646
  3,928
  4,228
  4,546
  4,885
  5,244
  5,625
  6,029
  6,457
Issuance/(repayment) of debt, $m
  -412
  -659
  166
  179
  193
  206
  221
  235
  250
  266
  282
  299
  316
  334
  353
  372
  393
  414
  436
  460
  484
  510
  536
  564
  594
  625
  657
  691
  726
  763
  802
Issuance/(repurchase) of shares, $m
  -458
  219
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -918
  -440
  166
  179
  193
  206
  221
  235
  250
  266
  282
  299
  316
  334
  353
  372
  393
  414
  436
  460
  484
  510
  536
  564
  594
  625
  657
  691
  726
  763
  802
Total cash flow (excl. dividends), $m
  -350
  224
  911
  978
  1,053
  1,137
  1,229
  1,330
  1,440
  1,559
  1,689
  1,806
  1,957
  2,119
  2,293
  2,479
  2,678
  2,891
  3,117
  3,359
  3,617
  3,891
  4,183
  4,493
  4,822
  5,171
  5,541
  5,934
  6,351
  6,792
  7,259
Retained Cash Flow (-), $m
  163
  -829
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -77
  -81
  -85
  -89
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -604
  893
  958
  1,032
  1,114
  1,204
  1,304
  1,412
  1,530
  1,658
  1,773
  1,922
  2,082
  2,253
  2,437
  2,634
  2,845
  3,069
  3,308
  3,563
  3,835
  4,123
  4,430
  4,756
  5,102
  5,468
  5,858
  6,270
  6,707
  7,170
Discount rate, %
 
  7.30
  7.67
  8.05
  8.45
  8.87
  9.32
  9.78
  10.27
  10.79
  11.32
  11.89
  12.49
  13.11
  13.77
  14.45
  15.18
  15.93
  16.73
  17.57
  18.45
  19.37
  20.34
  21.35
  22.42
  23.54
  24.72
  25.96
  27.25
  28.62
  30.05
PV of cash for distribution, $m
 
  -563
  770
  760
  746
  728
  706
  678
  646
  609
  567
  515
  468
  420
  370
  322
  275
  230
  189
  153
  121
  93
  70
  52
  37
  26
  18
  12
  7
  5
  3
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Masco Corporation designs, manufactures, markets, and distributes home improvement and building products worldwide. Its Plumbing Products segment provides faucets, showerheads, handheld showers, valves, bathing units, shower enclosures, toilets, acrylic tubs, shower trays, spas products, exercise pools and systems, brass and copper plumbing system components, and other non-decorative plumbing products. The company’s Decorative Architectural Products segment offers architectural coatings, including paints, primers, specialty paints, stains, and waterproofing products; cabinet, door, window, and hardware products; and functional hardware, wall plates, hook and rail products, and picture hanging accessories, as well as decorative bath hardware, shower accessories, and shower doors. The company’s Cabinetry Products segment offers assembled cabinetry for kitchen, bath, storage, home office, and home entertainment applications; and integrated bathroom vanity and countertop products. Its Windows and Other Specialty Products segment provides vinyl, fiberglass, and aluminum windows and patio doors; vinyl windows, and composite and panel doors; and staple guns, hammer tackers, glue guns, and rivet tools, as well as staples, glues, and rivets. The company sells its products under DELTA, BRIZO, PEERLESS, HANSGROHE, AXOR, GINGER, NEWPORT BRASS, BRASSTECH, WALTEC, BRISTAN, HERITAGE, MIROLIN, HÜPPE, HOT SPRING, CALDERA, FREEFLOW SPAS, FANTASY SPAS, ENDLESS POOLS, BRASSCRAFT, PLUMB SHOP, COBRA, MASTER PLUMBER, BEHR, KILZ, LIBERTY, BRAINERD, FRANKLIN BRASS, KRAFTMAID, CARDELL, MERILLAT, QUALITY CABINETS, MOORES, ESSENCE SERIES, MILGARD, DURAFLEX, GRIFFIN, PREMIER, EVOLUTION, ARROW, POWERSHOT, and EASYSHOT brands. It offers its products through home center retailers, mass merchandisers, hardware stores, homebuilders, distributors, and other outlets to consumers and contractors, as well as directly to consumers. The company was founded in 1929 and is headquartered in Taylor, Michigan.

FINANCIAL RATIOS  of  Masco (MAS)

Valuation Ratios
P/E Ratio 24.8
Price to Sales 1.7
Price to Book -40.9
Price to Tangible Book
Price to Cash Flow 16.8
Price to Free Cash Flow 22.3
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.9%
Cap. Spend. - 3 Yr. Gr. Rate 7.4%
Financial Strength
Quick Ratio 596
Current Ratio 0
LT Debt to Equity -1005%
Total Debt to Equity -1005.7%
Interest Coverage 5
Management Effectiveness
Return On Assets 11.5%
Ret/ On Assets - 3 Yr. Avg. 12.1%
Return On Total Capital 16.4%
Ret/ On T. Cap. - 3 Yr. Avg. 15.4%
Return On Equity -226.8%
Return On Equity - 3 Yr. Avg. -7.1%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 33.4%
Gross Margin - 3 Yr. Avg. 31.4%
EBITDA Margin 16.1%
EBITDA Margin - 3 Yr. Avg. 14.6%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. 12.5%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. 9.4%
Net Profit Margin 6.7%
Net Profit Margin - 3 Yr. Avg. 8%
Effective Tax Rate 35.7%
Eff/ Tax Rate - 3 Yr. Avg. 2.3%
Payout Ratio 26.1%

MAS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MAS stock intrinsic value calculation we used $7357 million for the last fiscal year's total revenue generated by Masco. The default revenue input number comes from 2016 income statement of Masco. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MAS stock valuation model: a) initial revenue growth rate of 3.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.3%, whose default value for MAS is calculated based on our internal credit rating of Masco, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Masco.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MAS stock the variable cost ratio is equal to 35.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3796 million in the base year in the intrinsic value calculation for MAS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.2% for Masco.

Corporate tax rate of 27% is the nominal tax rate for Masco. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MAS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MAS are equal to 9.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Masco operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MAS is equal to 3.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-298 million for Masco - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 314.236 million for Masco is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Masco at the current share price and the inputted number of shares is $12.0 billion.

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COMPANY NEWS

▶ ETFs with exposure to Masco Corp. : July 4, 2017   [Jul-04-17 03:09PM  Capital Cube]
▶ Masco Corporation Announces Pricing of Tender Offers   [Jun-26-17 03:45PM  Business Wire]
▶ Masco Corporation Declares Quarterly Dividend   [Jun-22-17 09:00AM  Business Wire]
▶ Home Construction Sector Is Moving Well   [Jun-02-17 02:23PM  TheStreet.com]
▶ ETFs with exposure to Masco Corp. : May 23, 2017   [May-23-17 12:57PM  Capital Cube]
▶ ETFs with exposure to Masco Corp. : April 28, 2017   [Apr-28-17 04:04PM  Capital Cube]
▶ Masco Is Flowing to the Upside   [Apr-25-17 04:38PM  TheStreet.com]
▶ Masco tops Street 1Q forecasts   [07:08AM  Associated Press]
▶ Masco Corp. Value Analysis (NYSE:MAS) : April 24, 2017   [Apr-24-17 03:34PM  Capital Cube]
▶ Masco Corporation to Host Investor Day on May 16, 2017   [Apr-18-17 09:00AM  Business Wire]
▶ Masco Corporation Trades Ex-Dividend Wednesday   [Apr-09-17 05:38PM  Investopedia]
▶ 3 Residential Construction Stocks to Buy in 2017   [Apr-05-17 10:00AM  Motley Fool]
▶ Masco Corporation Declares Quarterly Dividend   [Mar-24-17 09:00AM  Business Wire]
▶ TopBuild: Cramer's Top Takeaways   [Mar-09-17 06:25AM  TheStreet.com]
▶ These Four Stocks Perform Well in March   [Mar-06-17 01:00PM  Investopedia]
▶ Is CenterPoint Energy, Inc. (CNP) A Good Stock To Buy?   [Nov-30-16 01:37AM  at Insider Monkey]
▶ Hedge Funds Are Betting On Masco Corp (MAS)   [Nov-24-16 10:41AM  at Insider Monkey]
Stock chart of MAS Financial statements of MAS Annual reports of MAS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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