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Why the Upgrade?
Fortune Brands H&S has been witnessing rising earnings estimates driven by strong fiscal third-quarter 2012 results and an enhanced fiscal 2012 guidance. Moreover, this well-known producer of home and security products delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 63.1%. The long-term expected earnings growth rate for this stock is 16.3%.
On Oct 23, 2012, Fortune Brands H&S posted third quarter 2012 adjusted earnings of 29 cents per share, exceeding the Zacks Consensus Estimate and year-ago quarters’ earnings of 25 cents and 20 cents, respectively. The year over year upbeat results benefited from top-line growth and cost-saving actions.
Total revenue went up 7.2% to $909.0 million from the year-ago quarter’s level, primarily driven by higher sales volume from an improving U.S. home products market, price increases and new product launches. The results beat the Zacks Consensus Estimate of $900.0 million.
Following the upbeat third quarter and improvement in the home products market, management raised its earnings per share outlook for 2012. The company now expects earnings per share to be between 86 cents and 88 cents, up from the prior forecast of 77–87 cents.
The Zacks Consensus Estimate for fiscal 2012 increased 6.0% to 88 cents per share as most of the estimates were revised higher over the last 90 days. The current estimate is at the higher end of the company’s guidance range. For fiscal 2013, estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 1.8% to $1.15 per share.
Other Stocks to Consider
Besides Fortune Brands H&S, other stocks that are currently performing well include American Woodmark Corporation ( AMWD - Snapshot Report ) , Virco Mfg. Corporation ( VIRC ) and Pier 1 Imports, Inc. ( PIR - Snapshot Report ) . All these companies carry a Zacks Rank #1 (Strong Buy) except Pier 1 Imports, which holds a Zacks Rank #2 (Buy).
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