Intrinsic value of Masco - MAS

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$34.34

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$34.34

 
Intrinsic value

$13.23

 
Up/down potential

-61%

 
Rating

str. sell

 
Value-price divergence* premium content

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*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 11.1

 

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
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  7,357
  7,548
  7,763
  8,000
  8,260
  8,543
  8,849
  9,178
  9,532
  9,910
  10,314
  10,743
  11,199
  11,683
  12,196
  12,739
  13,313
  13,919
  14,560
  15,235
  15,948
  16,698
  17,489
  18,323
  19,200
  20,123
  21,094
  22,116
  23,191
  24,322
  25,510
Variable operating expenses, $m
 
  2,670
  2,743
  2,825
  2,914
  3,011
  3,116
  3,229
  3,350
  3,479
  3,618
  3,682
  3,838
  4,004
  4,179
  4,366
  4,562
  4,770
  4,989
  5,221
  5,465
  5,722
  5,993
  6,279
  6,580
  6,896
  7,229
  7,579
  7,947
  8,335
  8,742
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
  6,561
  6,731
  6,913
  7,104
  7,306
  7,518
  7,741
  7,975
  8,220
  8,477
  8,663
  8,943
  9,237
  9,543
  9,864
  10,197
  10,546
  10,909
  11,289
  11,685
  12,098
  12,528
  12,977
  13,446
  13,934
  14,443
  14,973
  15,526
  16,103
  16,704
Operating income, $m
  1,053
  987
  1,031
  1,087
  1,156
  1,237
  1,331
  1,438
  1,557
  1,690
  1,837
  2,081
  2,256
  2,447
  2,653
  2,876
  3,116
  3,373
  3,650
  3,946
  4,262
  4,600
  4,961
  5,345
  5,754
  6,189
  6,652
  7,143
  7,665
  8,219
  8,806
EBITDA, $m
  1,212
  1,148
  1,194
  1,253
  1,324
  1,409
  1,506
  1,616
  1,739
  1,876
  2,026
  2,192
  2,372
  2,567
  2,779
  3,007
  3,253
  3,517
  3,800
  4,103
  4,427
  4,772
  5,141
  5,534
  5,952
  6,397
  6,870
  7,372
  7,904
  8,470
  9,069
Interest expense (income), $m
  198
  186
  75
  81
  88
  96
  105
  114
  124
  134
  146
  158
  170
  184
  199
  214
  230
  247
  266
  285
  305
  326
  349
  372
  397
  424
  451
  480
  511
  543
  577
Earnings before tax, $m
  830
  802
  956
  1,006
  1,068
  1,141
  1,226
  1,324
  1,434
  1,556
  1,691
  1,923
  2,086
  2,263
  2,454
  2,662
  2,885
  3,126
  3,384
  3,661
  3,957
  4,274
  4,612
  4,973
  5,357
  5,766
  6,201
  6,663
  7,154
  7,676
  8,229
Tax expense, $m
  296
  216
  258
  272
  288
  308
  331
  357
  387
  420
  457
  519
  563
  611
  663
  719
  779
  844
  914
  988
  1,068
  1,154
  1,245
  1,343
  1,446
  1,557
  1,674
  1,799
  1,932
  2,072
  2,222
Net income, $m
  491
  585
  698
  734
  779
  833
  895
  966
  1,047
  1,136
  1,235
  1,404
  1,523
  1,652
  1,792
  1,943
  2,106
  2,282
  2,470
  2,673
  2,889
  3,120
  3,367
  3,630
  3,911
  4,209
  4,527
  4,864
  5,223
  5,603
  6,007

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
  4,050
  4,165
  4,292
  4,431
  4,583
  4,747
  4,924
  5,114
  5,317
  5,533
  5,763
  6,008
  6,268
  6,543
  6,834
  7,142
  7,467
  7,811
  8,173
  8,556
  8,958
  9,383
  9,830
  10,300
  10,796
  11,317
  11,865
  12,442
  13,048
  13,686
Adjusted assets (=assets-cash), $m
  3,946
  4,050
  4,165
  4,292
  4,431
  4,583
  4,747
  4,924
  5,114
  5,317
  5,533
  5,763
  6,008
  6,268
  6,543
  6,834
  7,142
  7,467
  7,811
  8,173
  8,556
  8,958
  9,383
  9,830
  10,300
  10,796
  11,317
  11,865
  12,442
  13,048
  13,686
Revenue / Adjusted assets
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
  1.864
Average production assets, $m
  731
  747
  769
  792
  818
  846
  876
  909
  944
  981
  1,021
  1,064
  1,109
  1,157
  1,207
  1,261
  1,318
  1,378
  1,441
  1,508
  1,579
  1,653
  1,731
  1,814
  1,901
  1,992
  2,088
  2,190
  2,296
  2,408
  2,526
Working capital, $m
  1,474
  294
  303
  312
  322
  333
  345
  358
  372
  386
  402
  419
  437
  456
  476
  497
  519
  543
  568
  594
  622
  651
  682
  715
  749
  785
  823
  863
  904
  949
  995
Total debt, $m
  2,997
  1,207
  1,310
  1,425
  1,550
  1,687
  1,835
  1,994
  2,164
  2,347
  2,542
  2,749
  2,969
  3,203
  3,451
  3,713
  3,990
  4,283
  4,592
  4,918
  5,262
  5,625
  6,006
  6,409
  6,832
  7,278
  7,747
  8,241
  8,760
  9,305
  9,879
Total liabilities, $m
  5,435
  3,645
  3,748
  3,863
  3,988
  4,125
  4,273
  4,432
  4,602
  4,785
  4,980
  5,187
  5,407
  5,641
  5,889
  6,151
  6,428
  6,721
  7,030
  7,356
  7,700
  8,063
  8,444
  8,847
  9,270
  9,716
  10,185
  10,679
  11,198
  11,743
  12,317
Total equity, $m
  -298
  405
  416
  429
  443
  458
  475
  492
  511
  532
  553
  576
  601
  627
  654
  683
  714
  747
  781
  817
  856
  896
  938
  983
  1,030
  1,080
  1,132
  1,187
  1,244
  1,305
  1,369
Total liabilities and equity, $m
  5,137
  4,050
  4,164
  4,292
  4,431
  4,583
  4,748
  4,924
  5,113
  5,317
  5,533
  5,763
  6,008
  6,268
  6,543
  6,834
  7,142
  7,468
  7,811
  8,173
  8,556
  8,959
  9,382
  9,830
  10,300
  10,796
  11,317
  11,866
  12,442
  13,048
  13,686
Debt-to-equity ratio
  -10.057
  2.980
  3.150
  3.320
  3.500
  3.680
  3.860
  4.050
  4.230
  4.410
  4.590
  4.770
  4.940
  5.110
  5.270
  5.430
  5.590
  5.740
  5.880
  6.020
  6.150
  6.280
  6.400
  6.520
  6.630
  6.740
  6.850
  6.950
  7.040
  7.130
  7.220
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
  585
  698
  734
  779
  833
  895
  966
  1,047
  1,136
  1,235
  1,404
  1,523
  1,652
  1,792
  1,943
  2,106
  2,282
  2,470
  2,673
  2,889
  3,120
  3,367
  3,630
  3,911
  4,209
  4,527
  4,864
  5,223
  5,603
  6,007
Depreciation, amort., depletion, $m
  159
  161
  163
  166
  168
  171
  174
  178
  181
  185
  190
  111
  115
  120
  126
  131
  137
  144
  150
  157
  164
  172
  180
  189
  198
  208
  218
  228
  239
  251
  263
Funds from operations, $m
  638
  746
  861
  900
  948
  1,004
  1,070
  1,144
  1,228
  1,321
  1,424
  1,515
  1,638
  1,772
  1,917
  2,074
  2,244
  2,425
  2,621
  2,830
  3,053
  3,292
  3,547
  3,819
  4,109
  4,417
  4,744
  5,092
  5,462
  5,854
  6,270
Change in working capital, $m
  -88
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
Cash from operations, $m
  726
  1,222
  853
  891
  938
  993
  1,058
  1,131
  1,214
  1,307
  1,408
  1,498
  1,620
  1,753
  1,897
  2,053
  2,221
  2,402
  2,596
  2,803
  3,026
  3,263
  3,516
  3,787
  4,074
  4,381
  4,706
  5,052
  5,420
  5,810
  6,224
Maintenance CAPEX, $m
  0
  -76
  -78
  -80
  -82
  -85
  -88
  -91
  -95
  -98
  -102
  -106
  -111
  -115
  -120
  -126
  -131
  -137
  -144
  -150
  -157
  -164
  -172
  -180
  -189
  -198
  -208
  -218
  -228
  -239
  -251
New CAPEX, $m
  -180
  -16
  -21
  -23
  -26
  -28
  -30
  -33
  -35
  -37
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -112
  -118
Cash from investing activities, $m
  -124
  -92
  -99
  -103
  -108
  -113
  -118
  -124
  -130
  -135
  -142
  -149
  -156
  -163
  -171
  -180
  -188
  -197
  -207
  -217
  -228
  -238
  -250
  -262
  -276
  -289
  -304
  -319
  -334
  -351
  -369
Free cash flow, $m
  602
  1,129
  754
  787
  829
  880
  939
  1,008
  1,085
  1,171
  1,266
  1,349
  1,464
  1,590
  1,726
  1,874
  2,033
  2,204
  2,389
  2,586
  2,798
  3,024
  3,266
  3,524
  3,799
  4,091
  4,403
  4,734
  5,085
  5,459
  5,855
Issuance/(repayment) of debt, $m
  -412
  -1,788
  104
  115
  126
  137
  148
  159
  171
  183
  195
  207
  220
  234
  248
  262
  277
  293
  309
  326
  344
  363
  382
  402
  424
  446
  469
  493
  519
  546
  574
Issuance/(repurchase) of shares, $m
  -458
  1,362
  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
  -426
  104
  115
  126
  137
  148
  159
  171
  183
  195
  207
  220
  234
  248
  262
  277
  293
  309
  326
  344
  363
  382
  402
  424
  446
  469
  493
  519
  546
  574
Total cash flow (excl. dividends), $m
  -350
  -659
  857
  902
  955
  1,017
  1,087
  1,167
  1,255
  1,353
  1,461
  1,556
  1,685
  1,824
  1,974
  2,136
  2,310
  2,497
  2,698
  2,912
  3,142
  3,387
  3,648
  3,926
  4,222
  4,537
  4,872
  5,227
  5,604
  6,005
  6,429
Retained Cash Flow (-), $m
  163
  -1,892
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
Prev. year cash balance distribution, $m
 
  1,189
  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
 
  0
  846
  889
  941
  1,002
  1,071
  1,149
  1,236
  1,333
  1,439
  1,533
  1,660
  1,798
  1,946
  2,107
  2,279
  2,465
  2,663
  2,876
  3,104
  3,346
  3,605
  3,881
  4,175
  4,487
  4,819
  5,172
  5,547
  5,944
  6,365
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
 
  0
  730
  705
  680
  655
  627
  598
  565
  530
  492
  446
  405
  362
  320
  278
  238
  200
  164
  133
  105
  81
  61
  45
  33
  23
  15
  10
  7
  4
  2
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 22.2
Price to Sales 1.5
Price to Book -36.6
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 20
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 2.6% 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 9.9%.

Life of production assets of 9.6 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 321.859 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 $11.1 billion.


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COMPANY NEWS

▶ 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]
▶ Lowe's: 5 Reasons to Bail Now   [11:49AM  at Barrons.com]
▶ Masco shares drag homebuilders after earnings miss   [Oct-25-16 04:05PM  at CNBC]
Stock chart of MAS Financial statements of MAS
Valuation of Stocks

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