MasterBrand stock rating reiterated at Buy by Loop Capital

Investing.com - Loop Capital has maintained its Buy rating and $15.00 price target on MasterBrand (NYSE:MBC) following meetings with the company’s management across the Midwest. According to InvestingPro data, MBC currently trades at a P/E ratio of ~13x with a market capitalization of $1.38 billion. InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model.

The firm reports that demand remains soft for the cabinet maker, with a deceleration in new construction beginning to impact revenues in the second half of the year as anticipated. Despite these challenges, Loop Capital indicates there appears to be limited additional downside risk to MasterBrand’s fiscal year 2025 guidance, which was previously reduced after first-quarter results. InvestingPro data shows the company maintains strong liquidity with a current ratio of 1.9, while analysts expect the company to remain profitable this year.

Loop Capital expects MasterBrand’s revenues will decline mid-single digits year-over-year in the second half as the company laps its Supreme acquisition and faces high-single-digit market contraction. The firm notes that decremental margins should significantly improve sequentially, potentially reaching a more normalized 25% range as capacity reductions are completed and productivity initiatives continue.

The research firm believes MasterBrand is gaining market share, particularly in new construction, which should help the company outperform the broader market despite overall muted demand. This market share growth comes despite the typical three-to-six-month lag between housing starts and cabinet installation that could keep sales subdued into 2026.

Loop Capital suggests that stabilizing margin performance could serve as a catalyst for the stock, which it views as trading near trough multiples, supporting its maintained Buy rating and $15 price target. With EBITDA of $337.8M in the last twelve months and significant price decline over the past three months, InvestingPro subscribers can access additional insights through comprehensive Pro Research Reports, available for over 1,400 US stocks including MasterBrand.

In other recent news, MasterBrand, Inc. reported first-quarter earnings that fell short of analyst expectations, with adjusted earnings per share at $0.18 compared to the anticipated $0.28. The company’s revenue reached $660.3 million, marking a 3% increase year-over-year, bolstered by a 10% growth from the Supreme acquisition and a 2% improvement in average selling prices. However, this growth was partially offset by a 9% decline in the volume of the base business. MasterBrand’s net income saw a significant decrease of 65% year-over-year, totaling $13.3 million, with the net income margin contracting by 390 basis points to 2.0%. The adjusted EBITDA margin also declined by 220 basis points to 10.2%. Looking forward, the company provided a full-year 2025 guidance that did not meet analyst expectations, forecasting adjusted EPS between $1.03 and $1.32, below the consensus of $1.35. MasterBrand anticipates a low single-digit percentage decrease in net sales year-over-year. The company remains committed to preserving margins through cost-cutting measures and tariff remediation efforts. During the quarter, MasterBrand repurchased approximately 839,000 shares for $11.4 million.

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