Comparing Masco (NYSE:MAS) & Armstrong World Industries (NYSE:AWI)

Masco (NYSE:MAS) and Armstrong World Industries (NYSE:AWI) are both construction companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Dividends

Masco pays an annual dividend of $1.24 per share and has a dividend yield of 2.0%. Armstrong World Industries pays an annual dividend of $1.35 per share and has a dividend yield of 0.7%. Masco pays out 31.8% of its earnings in the form of a dividend. Armstrong World Industries pays out 19.3% 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 has increased its dividend for 12 consecutive years and Armstrong World Industries has increased its dividend for 1 consecutive years. Masco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

93.9% of Masco shares are held by institutional investors. Comparatively, 98.9% of Armstrong World Industries shares are held by institutional investors. 0.5% of Masco shares are held by company insiders. Comparatively, 1.0% of Armstrong World Industries 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.

Analyst Ratings

This is a summary of recent recommendations and price targets for Masco and Armstrong World Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Masco	0	13	6	1	2.40
Armstrong World Industries	0	4	5	1	2.70

Masco presently has a consensus price target of $73.53, suggesting a potential upside of 17.68%. Armstrong World Industries has a consensus price target of $207.50, suggesting a potential upside of 9.96%. Given Masco’s higher possible upside, equities research analysts clearly believe Masco is more favorable than Armstrong World Industries.

Risk and Volatility

Masco has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500. Comparatively, Armstrong World Industries has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Valuation and Earnings

This table compares Masco and Armstrong World Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Masco	$7.60 billion	1.71	$822.00 million	$3.90	16.02
Armstrong World Industries	$1.60 billion	5.09	$264.90 million	$6.99	27.00

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

Profitability

This table compares Masco and Armstrong World Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Masco	10.89%	1,317.38%	16.47%
Armstrong World Industries	19.08%	38.97%	17.14%

Summary

Armstrong World Industries beats Masco on 10 of the 17 factors compared between the two stocks.

About Masco

Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally. The company's Plumbing Products segment offers faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, sinks, toilets, acrylic tubs, shower trays, spas, exercise pools, and fitness systems; brass, copper, and composite plumbing system components; connected water products; thermoplastic solutions, extruded plastic profiles, specialized fabrications, and PEX tubing products; and other non-decorative plumbing products. This segment provides its products under the DELTA, BRIZO, PEERLESS, HANSGROHE, AXOR, KRAUS, EASY DRAIN, STEAMIST, ELITESTEAM, GINGER, NEWPORT BRASS, BRASSTECH, WALTEC, BRISTAN, HERITAGE, MIROLIN, HOT SPRING, CALDERA, FREEFLOW SPAS, FANTASY SPAS, ENDLESS POOLS, BRASSCRAFT, PLUMB SHOP, COBRA, COBRA PRO, and MASTER PLUMBER brands. Its Decorative Architectural Products segment offers paints, primers, specialty coatings, stains, and waterproofing products, as well as paint applicators and accessories; cabinet and door hardware, functional hardware, wall plates, hook and rail products, closet organization systems, and picture hanging accessories; decorative bath hardware, mirrors, and shower accessories and doors; and decorative indoor and outdoor lighting fixtures, ceiling fans, landscape lighting, and LED lighting systems. This segment provides its products under the BEHR, KILZ, WHIZZ, Elder & Jenks, LIBERTY, BRAINERD, FRANKLIN BRASS, KICHLER, and ÉLAN brands. It sells its products to the plumbing, heating, and hardware wholesalers; home centers and online retailers; hardware stores; electrical and landscape distributors; lighting showrooms; building supply outlets; and other mass merchandisers. Masco Corporation was incorporated in 1929 and is headquartered in Livonia, Michigan.

About Armstrong World Industries

Armstrong World Industries, Inc., together with its subsidiaries, engages in the design, manufacture, and sale of ceiling and wall solutions in the Americas. It operates through Mineral Fiber and Architectural Specialties segments. The company offers mineral fiber, fiberglass wool, metal, wood, felt, wood fiber, and glass-reinforced-gypsum; ceiling component products, such as ceiling perimeters and trims, as well as grid products that support drywall ceiling systems; ceilings, walls, and facades for use in commercial settings; and manufactures ceiling suspension system (grid) products. It serves commercial and residential construction markets, as well as renovation of existing buildings sectors. The company sells its products to resale distributors, ceiling system contractors, wholesalers, and retailers comprising large home centers. Armstrong World Industries, Inc. was founded in 1860 and is headquartered in Lancaster, Pennsylvania.