A Warning Sign on American Woodmark Corporation (AMWD): Masco Corporation (MAS), Fortune Brands Home & Security Inc (FBHS)

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Masco Corporation (NYSE:MAS) is trading at around $20 per share, with a total market cap of nearly $7.1 billion. Masco has a much cheaper valuation at 15 times EV/EBITDA. Fortune Brands Home & Security Inc (NYSE:FBHS), with $5.91 billion in total market cap, is valued at 20.87 times EV/EBITDA.

Interestingly, American Woodmark is the least profitable company among the three. In the past twelve months, it generated only 1% operating margin, while the operating margins of Masco Corporation (NYSE:MAS) and Fortune Brands were 5.5% and 5.17%, respectively. While Fortune Brands Home & Security Inc (NYSE:FBHS) and American Woodmark are not paying any dividends,  Masco Corporation (NYSE:MAS)’s dividend yield is 1.5%.

Foolish takeaway

Personally, I do not think investors should get in American Woodmark Corporation (NASDAQ:AMWD) at its current price. I might be wrong though. However, with its aggressive revenue recognition in the financial statements, and extremely high valuation, I think American Woodmark would experience a price correction in the near future.

The article A Warning Sign on This Kitchen Cabinet Provider originally appeared on Fool.com and is written by Anh HOANG.

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