Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of building products manufacturer Masco
So what: Masco's shares have rallied over the past few months on signs of a bottoming housing market, but today's fourth-quarter miss -- adjusted loss of $0.09 per share versus the consensus of just a $0.03 per-share loss -- suggests that management isn't taking full advantage of the improving environment. Its adjusted operating margin even shrank year-over-year, triggering fresh worries over the company's long-term profitability.
Now what: I'd look into this plunge as a possible buying opportunity. "While 2011 was a difficult year, we head into 2012 with cautious optimism," said CEO Tim Wadhans. "The major restructuring activities impacting our Installation segment and our North American cabinet operations are behind us and those businesses experienced improving operational trends in the fourth quarter." While Masco's fundamentals still make it a questionable long-term pick, solid sales in January and so far in February might be signaling a short-term bounce.
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