Masco Raises 2026 EPS Outlook as Q3 Margins Expand

Masco Corporation (NYSE: MAS) increased its full-year 2026 adjusted earnings outlook after third-quarter profit growth outpaced a modest rise in revenue, supported by pricing, cost savings and lower year-over-year tariff costs.

The home improvement and building products company now expects adjusted earnings of $4.65 to $4.75 per share, compared with its previous range of $4.40 to $4.60. GAAP earnings are forecast at $4.51 to $4.61 per share. Masco continues to project low-single-digit sales growth and an adjusted operating margin of 18.0% to 18.5% for the year.

Margins expand as sales rise 3%

Third-quarter revenue increased 3% year over year to $1.97 billion. Excluding the Bristan divestiture and unfavorable currency movements, sales rose 4%. North American sales increased 5% in local currency, while international sales declined 5%, or 1% excluding the divestiture.

Adjusted operating profit rose to $351 million from $312 million, lifting the adjusted operating margin by 160 basis points to 17.9%. Adjusted gross margin expanded 250 basis points to 37.1%. Adjusted earnings increased 23% to $1.19 per diluted share from $0.97, while average diluted shares outstanding fell to 196 million from 209 million.

On a GAAP basis, operating profit was $338 million, compared with $303 million a year earlier, and operating margin increased to 17.2% from 15.8%. The adjusted figures exclude $13 million of third-quarter rationalization charges, up from $8 million in the prior-year period. The EPS reconciliation also excludes a gain related to the sale of Bristan Group and a net loss from financial investments.

Masco attributed operating profit growth to pricing actions, cost-saving initiatives and lower tariff costs than in the prior-year quarter. Higher commodity and employee-related expenses partly offset those benefits.

Plumbing drives segment growth

The Plumbing Products segment generated revenue of $1.34 billion, up 4%. Sales rose 5% excluding the effects of the divestiture and unfavorable currency. North American sales increased 8% in local currency, while international sales fell 5%, or 1% excluding Bristan.

Adjusted segment operating profit increased by $51 million to $256 million. The adjusted operating margin expanded 320 basis points to 19.1%, reflecting pricing, cost savings and lower year-over-year tariff costs, partly offset by higher commodity and employee-related costs.

Masco expects Plumbing Products sales to increase at the higher end of a low-single-digit range for 2026, with an adjusted operating margin of approximately 20%.

Decorative Architectural Products revenue was unchanged at $628 million. Professional paint sales increased by a mid-single-digit percentage, while do-it-yourself paint sales declined by a low-single-digit percentage.

Adjusted operating profit decreased by $1 million to $126 million, and the segment’s adjusted operating margin slipped 20 basis points to 20.1%. Higher commodity costs and lower volume weighed on profit, though pricing and cost-saving measures offset most of the impact. For the full year, Masco expects the segment’s sales to be roughly flat and its adjusted operating margin to be approximately 19.5%.

Capital deployment and financial position

Masco returned $322 million to shareholders through dividends and share repurchases during the quarter. For 2026, the company expects to deploy about $1 billion toward share repurchases or acquisitions and said it is continuing to develop its acquisition pipeline.

The company’s other full-year assumptions include approximately $175 million of capital expenditures, a 24.5% tax rate, about $50 million of rationalization charges and free cash flow conversion of roughly 95%.

As of September 30, Masco held $610 million in cash and cash investments and had $1 billion available under its revolving credit facility, for total liquidity of $1.61 billion. Gross debt to adjusted EBITDA was 2.1 times, below the company’s stated target of 2.5 times, while working capital represented 18.8% of trailing sales.

Masco cautioned that its outlook remains exposed to changes in residential repair and remodeling activity, and to a lesser extent new-home construction. Other uncertainties include tariffs, material costs and availability, reliance on key customers and suppliers, international operations, acquisition integration, cybersecurity threats and the company’s ability to achieve the expected benefits of its strategic initiatives.