Masco's Q2 Earnings Beat on Tariff Refunds, Sales Miss, Stock Down

MAS stock declined 6.7% during today’s pre-trading hours following the earnings release.

Masco’s Q2 Earnings & Sales

Second-quarter 2026 earnings of $1.64 per share increased 26.2% from $1.30 a year ago. The figure topped the Zacks Consensus Estimate of $1.30 by 26.2%.

Net sales declined 2.9% year over year to $1.99 billion and missed the consensus mark of $2.09 billion by 4.6%. Currency translation had a minimal impact on quarterly revenues. In local currency, North American sales fell 5%, while international sales increased 4%.

MAS’ Operating Margin Expands on Tariff Refunds

Reported gross profit increased 12.4% year over year to $868 million. Gross margin expanded 600 basis points to 43.6%.

On an adjusted basis, gross profit rose to $872 million from $774 million. Adjusted gross margin improved 610 basis points to 43.8%, supported by lower tariff costs, including refunds, cost-saving initiatives and higher selling prices. These benefits were partly offset by lower sales volume, increased commodity costs, unfavorable product mix and other expenses.

Adjusted operating profit increased 16.7% to $482 million. Adjusted operating margin expanded 410 basis points to 24.2%. The quarter included an approximately $95 million net benefit from refunds of tariffs imposed under the International Emergency Economic Powers Act.

Selling, general and administrative expenses increased 10% to $397 million. Higher employee-related expenses and increased legal and professional fees contributed to the rise.

Masco’s Plumbing Products Face Volume Pressure

Plumbing Products segment sales decreased 2.6% year over year to $1.337 billion (up from our model’s projection of $1.22 billion). Currency had a minimal impact on the segment’s results.

Adjusted operating profit increased to $361 million from $286 million. The adjusted operating margin expanded 620 basis points to 27%. The improvement reflected the tariff refund benefit, pricing and cost savings, partly offset by lower volume and higher tariff, commodity and employee-related costs.

MAS’ Decorative Products Sales Decline

Decorative Architectural Products segment sales decreased 3.5% year over year to $655 million (down from our model’s projection of $609.3 million). Professional paint sales increased in the mid-single digits, but do-it-yourself paint sales declined in the high-single digits.

The DIY decline was affected by the customer transition of Masco’s primer and applicator business. Lower sales volume also pressured the segment’s overall top line.

Adjusted operating profit edged up to $148 million from $147 million. Adjusted operating margin increased 100 basis points to 22.6%, as cost-saving initiatives and higher prices offset lower volume and increased commodity costs.

Masco’s Capital Returns Remain a Major Feature

Masco returned $454 million to its shareholders through dividends and share repurchases during the quarter. In the first six months of 2026, the company spent $592 million on common-stock repurchases and paid $129 million in cash dividends.

Cash and cash investments totaled $548 million at quarter-end. Total liquidity was $1.548 billion, including $1 billion of available revolving credit. Gross debt to EBITDA was 2.1X, while working capital represented 19.8% of trailing sales.

Net cash from operating activities increased to $417 million in the first half from $148 million a year earlier. Capital expenditures rose to $77 million from $68 million.

MAS Raises Its 2026 Earnings Range

Masco raised its adjusted earnings forecast for 2026 to $4.40-$4.60 per share from $4.10-$4.30. The revision reflects an anticipated full-year net benefit of approximately $85 million from tariff refunds, while management indicated that underlying business performance remained largely aligned with its previous outlook.

The company expects total sales to increase in the low-single digits. Plumbing Products sales are projected to rise in the low-single digits, while Decorative Architectural Products revenues are expected to remain in line with 2025. Masco forecasts adjusted operating margins of about 20% for Plumbing Products, 19% for Decorative Architectural Products and 18% companywide.

MAS’ Zacks Rank & Recent Construction Releases

Masco currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comfort Systems USA, Inc. FIX delivered impressive second-quarter 2026 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing sharply year over year.

Comfort Systems’ quarterly performance reflected continued strength across its end markets, robust execution by the operating teams and sustained demand that drove record backlog growth, reinforcing its confidence in the business momentum. Backlog as of June 30, 2026, totaled $14.06 billion, increasing 12.9% from $12.45 billion on March 31, 2026, and jumping 73.2% from $8.12 billion reported a year ago.

United Rentals, Inc. URI reported solid second-quarter 2026 results, with adjusted earnings per share and total revenues beating the Zacks Consensus Estimate and increasing year over year.

Record rental revenues, higher fleet productivity and robust specialty demand supported United Rentals’ results. Fleet productivity improved 3.4% year over year. Rental revenues increased 12.7% year over year to a quarterly record of $3.85 billion. Management raised its 2026 revenue outlook to $17.5-$17.8 billion from $16.9-$17.4 billion. The adjusted EBITDA forecast increased to $7.98-$8.13 billion from $7.63-$7.88 billion.

PulteGroup, Inc. PHM reported better-than-expected second-quarter 2026 results, with adjusted earnings and total revenues topping the Zacks Consensus Estimate, but declining year over year.

The quarterly results reflect reduced home-closing volumes, softer average selling prices (ASP) and margin compression. Ongoing softness in the housing market because of weaker consumer confidence and ongoing affordability challenges due to high mortgage rates hurt the top-line growth. The number of homes closed declined 8.4% year over year to 6,997 units. Net new orders increased 6.4% year over year to 7,536 homes.

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