Fortune Brands Home & Security, Inc. reported second-quarter 2020 earnings before charges/gains of 94 cents per share, surpassing the Zacks Consensus Estimate of 59 cents. On a year-over-year basis, the bottom line decreased 8.7% due to a decline in sales.
Fortune Brands’ net sales were $1,375.8 million, decreasing 8.7% from the year-ago figure. The decline was attributable to weaker performances across Cabinets, and Doors & Security segments. The top line beat the consensus estimate of $1,316 million.
Segmental Details
Cabinets’ sales declined 15% year over year to $538.7 million. Results were affected by a softer market for premium products, which more than offset the solid demand for value products.
Plumbing sales remained relatively flat at $504.8 million. Impressive sales performance in the United States and China were partially offset by forex woes.
Doors & Security’s sales fell 9% to $332.3 million due to lower sales of security products.
Costs & Expenses
In the second quarter, Fortune Brands’ cost of sales decreased 8% year over year to $892.9 million. It represented 64.9% of net sales compared with 64.3% in the year-ago quarter. Selling, general and administrative expenses decreased 14% to $276.2 million, and represented 20.1% of the net sales compared with 21.3% a year ago.
Operating income before charges/gains decreased 7% to $196.7 million. Operating margin before charges/gains climbed 20 basis points to 14.3%. Interest expenses decreased 9% to $22.2 million.
Balance Sheet
Exiting the second quarter, Fortune Brands’ cash and cash equivalents were $398.4 million, up 2.7% from $387.9 million at the end of 2019. Its long-term debt climbed 10.4% to $2,245.9 million sequentially.
In the first six months of 2020, net cash generated by operating activities was $260.5 million compared with $112 million generated in the year-ago comparable period. Capital expenditure amounted to $42.3 million, down from $54.9 million in the year-ago period.
Outlook
On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, the company has now suspended its guidance for 2020.
Zacks Rank & Other Stocks to Consider
The company currently flaunts a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks are Griffon Corporation (GFF - Free Report) , AGCO Corporation (AGCO - Free Report) and Avery Dennison Corporation (AVY - Free Report) . While Griffon and AGCO currently sport a Zacks Rank #1, Avery Dennison carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Griffon delivered an earnings surprise of 21.76%, on average, in the trailing four quarters.
AGCO delivered an earnings surprise of 41.73%, on average, in the trailing four quarters.
Avery Dennison delivered an earnings surprise of 7.70%, on average, in the trailing four quarters.
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Zacks Names "Single Best Pick to Double"
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
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Fortune Brands Home & Security, Inc. reported second-quarter 2020 earnings before charges/gains of 94 cents per share, surpassing the Zacks Consensus Estimate of 59 cents. On a year-over-year basis, the bottom line decreased 8.7% due to a decline in sales.
Fortune Brands’ net sales were $1,375.8 million, decreasing 8.7% from the year-ago figure. The decline was attributable to weaker performances across Cabinets, and Doors & Security segments. The top line beat the consensus estimate of $1,316 million.
Segmental Details
Cabinets’ sales declined 15% year over year to $538.7 million. Results were affected by a softer market for premium products, which more than offset the solid demand for value products.
Plumbing sales remained relatively flat at $504.8 million. Impressive sales performance in the United States and China were partially offset by forex woes.
Doors & Security’s sales fell 9% to $332.3 million due to lower sales of security products.
Costs & Expenses
In the second quarter, Fortune Brands’ cost of sales decreased 8% year over year to $892.9 million. It represented 64.9% of net sales compared with 64.3% in the year-ago quarter. Selling, general and administrative expenses decreased 14% to $276.2 million, and represented 20.1% of the net sales compared with 21.3% a year ago.
Operating income before charges/gains decreased 7% to $196.7 million. Operating margin before charges/gains climbed 20 basis points to 14.3%. Interest expenses decreased 9% to $22.2 million.
Balance Sheet
Exiting the second quarter, Fortune Brands’ cash and cash equivalents were $398.4 million, up 2.7% from $387.9 million at the end of 2019. Its long-term debt climbed 10.4% to $2,245.9 million sequentially.
In the first six months of 2020, net cash generated by operating activities was $260.5 million compared with $112 million generated in the year-ago comparable period. Capital expenditure amounted to $42.3 million, down from $54.9 million in the year-ago period.
Outlook
On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, the company has now suspended its guidance for 2020.
Zacks Rank & Other Stocks to Consider
The company currently flaunts a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks are Griffon Corporation (GFF - Free Report) , AGCO Corporation (AGCO - Free Report) and Avery Dennison Corporation (AVY - Free Report) . While Griffon and AGCO currently sport a Zacks Rank #1, Avery Dennison carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Griffon delivered an earnings surprise of 21.76%, on average, in the trailing four quarters.
AGCO delivered an earnings surprise of 41.73%, on average, in the trailing four quarters.
Avery Dennison delivered an earnings surprise of 7.70%, on average, in the trailing four quarters.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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