Analyzing Masco Corporation (MAS) & Quanex Building Products Corporation (NX)

Masco Corporation (NYSE: MAS) and Quanex Building Products Corporation (NYSE:NX) are both construction companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Dividends

Masco Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. Quanex Building Products Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.8%. Masco Corporation pays out 24.7% of its earnings in the form of a dividend. Quanex Building Products Corporation pays out 42.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Masco Corporation has raised its dividend for 3 consecutive years. Masco Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Masco Corporation and Quanex Building Products Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Masco Corporation $7.47 billion 1.59 $1.23 billion $1.62 23.03
Quanex Building Products Corporation $883.58 million 0.81 $95.14 million $0.38 55.00

Masco Corporation has higher revenue and earnings than Quanex Building Products Corporation. Masco Corporation is trading at a lower price-to-earnings ratio than Quanex Building Products Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Masco Corporation and Quanex Building Products Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Masco Corporation 7.09% 20,509.09% 10.67%
Quanex Building Products Corporation 1.52% 7.87% 3.81%

Volatility & Risk

Masco Corporation has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500. Comparatively, Quanex Building Products Corporation has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Masco Corporation and Quanex Building Products Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Masco Corporation 0 2 13 0 2.87
Quanex Building Products Corporation 0 0 2 0 3.00

Masco Corporation presently has a consensus target price of $40.77, suggesting a potential upside of 9.27%. Quanex Building Products Corporation has a consensus target price of $24.00, suggesting a potential upside of 14.83%. Given Quanex Building Products Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Quanex Building Products Corporation is more favorable than Masco Corporation.

Institutional & Insider Ownership

88.5% of Masco Corporation shares are held by institutional investors. Comparatively, 99.8% of Quanex Building Products Corporation shares are held by institutional investors. 1.3% of Masco Corporation shares are held by company insiders. Comparatively, 5.3% of Quanex Building Products Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Masco Corporation beats Quanex Building Products Corporation on 12 of the 17 factors compared between the two stocks.

About Masco Corporation

Masco Corporation designs, manufactures, markets and distributes branded home improvement and building products. The Company operates through four business segments: Plumbing Products, Decorative Architectural Products, Cabinetry Products, and Windows and Other Specialty Products. The Company’s portfolio of brands includes BEHR paint; DELTA and HANSGROHE faucets, bath and shower fixtures; KRAFTMAID and MERILLAT cabinets; MILGARD windows and doors, and HOT SPRING spas. The Company’s plumbing products include faucets, showerheads, handheld showers, valves, bathing units, shower enclosures and toilets and are sold to home center retailers and to wholesalers and distributors. It also produces architectural coatings, including paints, primers, specialty paints, stains and waterproofing products. In North America, it manufactures and sells value-priced, stock and semi-custom assembled cabinetry for kitchen, bath, storage, home office and home entertainment applications.

About Quanex Building Products Corporation

Quanex Building Products Corporation manufactures components for original equipment manufacturers (OEM) in the building products industry. The Company’s components can be categorized as window and door (fenestration) components, and kitchen and bath cabinet components. The Company operates through three segments: North American Engineered Components (NA Engineered Components), which consists of four operating segments primarily focused on the fenestration market in North America manufacturing vinyl profiles, insulating glass (IG) spacers, screens and other fenestration components; European Engineered Components (EU Engineered Components), which consists of the United Kingdom-based vinyl extrusion business, manufacturing vinyl profiles and conservatories, and the European insulating glass business manufacturing IG spacers, and North American Cabinet Components (NA Cabinet Components), which consists of the North American cabinet door and components business.

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