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What's in Store for Fortune Brands (FBHS) in Q3 Earnings?
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Fortune Brands Home & Security, Inc. is scheduled to report third-quarter 2018 results on Oct 25, after the market closes.
The company has a mixed earnings surprise history. In the trailing four quarters, its results surpassed the Zacks Consensus Estimate twice for as many misses, resulting in an average negative earnings surprise of 1.38%. Notably, in the last reported quarter, the company posted earnings of $1.00, which missed the Zacks Consensus Estimate of $1.03 by 2.91%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Fortune Brands anticipates Plumbing, Doors and Security segments to gain from healthy product portfolio, anti-inflationary actions and solid product demand, going forward. Particularly, for the Cabinets segment, the company's restructuring actions to infuse strength in the business will be a boon. The company predicts gaining from the strengthening business of Global Plumbing Group, share buybacks, favorable pricing and its cost actions.
Moreover, Fortune Brands makes bolt-on acquisitions for development of its core segments as well as the creation of new platforms for expanding long-term growth opportunities. In 2017, the company’s Global Plumbing Group added new brands, including Shaws of England and Victoria + Albert brands. These acquired assets are likely to enhance the company's revenue generation capabilities. As a matter of fact, the Global Plumbing Group will gain from its efficient manufacturing process, efficient global supply chain, strong customer base and solid brand image. Also, Fortune Brands recently acquired North Carolina-based Fiberon. This buyout will complement its Doors & Security segment's Therma-Tru door brand and enhance growth opportunities in the outdoor living space.
Amid this backdrop, the Zacks Consensus Estimate for revenues from the company's Cabinets, Plumbing, Doors and Security segments are pegged at $632 million, $485 million, $193 million and $164 million, respectively. These projections are higher than the year-ago quarter’s tally of $614 million for Cabinets, $438 million for Plumbing, $139 million for Doors and $158 million for Security.
However, the U.S. housing starts in the third quarter were not impressive. For instance, housing starts recorded a decline of 5.3% in September. As Fortune Brands’ results are highly dependent on the U.S. housing market, weaker housing starts in the quarter under review might have affected the company’s business.
Further, huge debt levels can be detrimental to its financials in the quarter. Also, higher costs and expenses weighed on margins in the last reported quarter, evident from 100 basis point year-over-year fall in operating margin. We believe that unwarranted rise in costs and expenses might be detrimental to Fortune Brands' performance, going forward as well.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for Fortune Brands in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Fortune Brands has an Earnings ESP of -3.94% as the Most Accurate Estimate of $1.01 is pegged lower than the Zacks Consensus Estimate of $1.05. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Fortune Brands Home & Security, Inc. Price and EPS Surprise
Zacks Rank: Fortune Brands carries a Zacks Rank #3, which increases the predictive power of the ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Key Picks
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Middleby Corporation (MIDD - Free Report) has an Earnings ESP of +0.64% and a Zacks Rank #2.
Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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What's in Store for Fortune Brands (FBHS) in Q3 Earnings?
Fortune Brands Home & Security, Inc. is scheduled to report third-quarter 2018 results on Oct 25, after the market closes.
The company has a mixed earnings surprise history. In the trailing four quarters, its results surpassed the Zacks Consensus Estimate twice for as many misses, resulting in an average negative earnings surprise of 1.38%. Notably, in the last reported quarter, the company posted earnings of $1.00, which missed the Zacks Consensus Estimate of $1.03 by 2.91%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Fortune Brands anticipates Plumbing, Doors and Security segments to gain from healthy product portfolio, anti-inflationary actions and solid product demand, going forward. Particularly, for the Cabinets segment, the company's restructuring actions to infuse strength in the business will be a boon. The company predicts gaining from the strengthening business of Global Plumbing Group, share buybacks, favorable pricing and its cost actions.
Moreover, Fortune Brands makes bolt-on acquisitions for development of its core segments as well as the creation of new platforms for expanding long-term growth opportunities. In 2017, the company’s Global Plumbing Group added new brands, including Shaws of England and Victoria + Albert brands. These acquired assets are likely to enhance the company's revenue generation capabilities. As a matter of fact, the Global Plumbing Group will gain from its efficient manufacturing process, efficient global supply chain, strong customer base and solid brand image. Also, Fortune Brands recently acquired North Carolina-based Fiberon. This buyout will complement its Doors & Security segment's Therma-Tru door brand and enhance growth opportunities in the outdoor living space.
Amid this backdrop, the Zacks Consensus Estimate for revenues from the company's Cabinets, Plumbing, Doors and Security segments are pegged at $632 million, $485 million, $193 million and $164 million, respectively. These projections are higher than the year-ago quarter’s tally of $614 million for Cabinets, $438 million for Plumbing, $139 million for Doors and $158 million for Security.
However, the U.S. housing starts in the third quarter were not impressive. For instance, housing starts recorded a decline of 5.3% in September. As Fortune Brands’ results are highly dependent on the U.S. housing market, weaker housing starts in the quarter under review might have affected the company’s business.
Further, huge debt levels can be detrimental to its financials in the quarter. Also, higher costs and expenses weighed on margins in the last reported quarter, evident from 100 basis point year-over-year fall in operating margin. We believe that unwarranted rise in costs and expenses might be detrimental to Fortune Brands' performance, going forward as well.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for Fortune Brands in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Fortune Brands has an Earnings ESP of -3.94% as the Most Accurate Estimate of $1.01 is pegged lower than the Zacks Consensus Estimate of $1.05. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Fortune Brands Home & Security, Inc. Price and EPS Surprise
Fortune Brands Home & Security, Inc. Price and EPS Surprise | Fortune Brands Home & Security, Inc. Quote
Zacks Rank: Fortune Brands carries a Zacks Rank #3, which increases the predictive power of the ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Key Picks
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Tetra Tech, Inc. (TTEK - Free Report) has an Earnings ESP of +0.96% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Middleby Corporation (MIDD - Free Report) has an Earnings ESP of +0.64% and a Zacks Rank #2.
Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>