Home-building design and manufacturing company Masco Corporation (NYSE: MAS) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 3.3% year on year to $1.92 billion. Its non-GAAP profit of $0.97 per share was 5.7% below analysts’ consensus estimates.

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“During the third quarter, we continued to navigate through a dynamic geopolitical and macroeconomic environment. While the near-term market conditions remained a headwind to our business, our teams continued to focus on execution to grow share and drive long-term success,” said Masco President and CEO, Jon Nudi.

Company Overview

Headquartered just outside of Detroit, MI, Masco (NYSE: MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Masco’s 1.7% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Masco’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.6% annually.

Masco also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Masco’s organic revenue averaged 1% year-on-year declines. Because this number is better than its two-year revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results.

This quarter, Masco missed Wall Street’s estimates and reported a rather uninspiring 3.3% year-on-year revenue decline, generating $1.92 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 3% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.

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Operating Margin

Masco has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.6%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Masco’s operating margin decreased by 1.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Masco generated an operating margin profit margin of 15.8%, down 2.2 percentage points year on year. Since Masco’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Masco’s EPS grew at an unimpressive 7% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into Masco’s earnings to better understand the drivers of its performance. A five-year view shows that Masco has repurchased its stock, shrinking its share count by 19.9%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Masco, its two-year annual EPS growth of 4.2% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Masco reported adjusted EPS of $0.97, down from $1.08 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Masco’s full-year EPS of $4.03 to grow 5.4%.

Key Takeaways from Masco’s Q3 Results

We were impressed by how significantly Masco blew past analysts’ organic revenue expectations this quarter. On the other hand, its EBITDA missed and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 2.5% to $66.69 immediately following the results.

The latest quarter from Masco’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.