DOOR: Is This Oversold Stock a Buy Right Now?

Author: Finscreener

Estimated read time: 3 minutes

Publication date: 24th Feb 2022 11:55 GMT+1

Masonite International Corporation (NYSE: DOOR) is a U.S.-based company that designs, manufactures, and distributes interior and exterior doors used in the construction and repair, renovation, and remodeling of residential and nonresidential buildings. The company caters to over 7,600 customers across 60 countries, and its online tool called Unlock Masonite is said to provide the “Best Virtual Immersive Experience.”

Masonite has an attractive take on the door industry and is valued at a market capitalization of $2.63 billion. However, lately, it has been subjected to significant levels of volatility and has lost more than 24% of its value year-to-date.


Masonite is focused on providing revolutionary products

One of the best ways to capture a large slice of a market is to keep updating the product portfolio with attractive products. The introduction of exciting and revolutionary products which resonate with the customers can do wonders to the growth of an organization. Masonite is adopting the same approach and has introduced some exciting developments over the last few months.

On January 4, 2022, the company unveiled Masonite M-PwrTM Smart Doors, which is said to be the first-ever residential exterior door to integrate power, lights, a video doorbell, and a smart lock all at the same time. These doors use technology to incorporate the door to one's home’s electricity system and wireless internet network letting the owners control the operations remotely.  Even in power outages, a 24 hours battery backup is provided. The company expects this revolutionary product to gain considerable market share in the upcoming months.


Undeterred financials for DOOR stock

Despite suffering from Omicron-related labor shortages and the absence of a 53rd week in 2021, Masonite’s Q4 results for 2021 were relatively good. The company achieved net sales of $2.6 billion for the entire year, indicating 15% year-over-year growth. Moreover, by the end of the quarter, it had total available liquidity of $601 million, including $381 million in unrestricted cash and $220 million under the ABL Facility and AR Sales Program.

Though Masonite had to face a significant decline in its volume base, the increase in the average unit price (AUP) has contributed to attaining such financials. Besides, the company also expects a strong 2022 with continued strength in sales and growth in earnings.

The construction industry is quite volatile and generally involves a ton of risk. Even last year, the players in this industry had a hard time preserving their value. These entities had to suffer as the price of the construction materials increased by nearly 20%, affecting their overall growth. But they could manage their cash flows because of the resumption of construction activities in the residential areas and the monetary allotment made by the US government for the renovation of old bridges.


The verdict

Notwithstanding its volatile nature, the construction industry is still attractive considering that the global construction and building materials market is expected to grow at a CAGR of 5.76% to become a $1282.56 billion industry by 2025, providing industry players with enough room to grow top-line. Therefore, holding fundamentally-sound construction materials stocks like Masonite can prove beneficial in the long run.

Analysts tracking DOOR stock expect the company‘s sales to rise by 9.2% to $2.83 billion in 2022 and by 3.5% to $2.93 billion in 2023. Comparatively, its adjusted earnings are forecast to grow from $8.16 in 2021 to $10.87 in 2023. 

We can see that DOOR stock is valued at a forward price to sales multiple of 0.9x and a price to earnings multiple of 9.1x which is really attractive, given that earnings might increase at an annual rate of 50% in the next five years.

Disclaimer: The writer is an experienced financial consultant who writes for The observations he makes are his own and are not intended as investment or trading advice.