Fortune Brands Home & Security, Inc. ( FBHS Quick Quote FBHS - Free Report) reported third-quarter 2020 earnings before charges/gains of $1.19 per share, surpassing the Zacks Consensus Estimate of $1.06 by 12.3%. On a year-over-year basis, the bottom line increased 25.3% due to sales growth. Fortune Brands’ net sales were $1,652.1 million, increasing 13% from the year-ago figure. The improvement was driven by solid performance across all of its segments. The top line beat the consensus estimate of $1,528 million by 8.1%. Segmental Details
Cabinets’ net sales grew 11% year over year to $654.8 million. Results were driven by continued solid demand for value products.
Plumbing net sales increased 15% year over year to $590.6 million. Results were driven by impressive sales performance in the United States and China. Doors & Security’s net sales increased 14% to $406.7 million, on the back of higher sales of doors, decking and security products. Costs & Expenses
In the third quarter, Fortune Brands’ cost of sales increased 15% year over year to $1,071.5 million. It represented 64.9% of net sales compared with 64.1% in the year-ago quarter. Selling, general and administrative expenses increased 5% to $328.3 million, and represented 19.9% of the net sales compared with 21.3% a year ago.
Operating income before charges/gains increased 20% to $244.2 million. Operating margin before charges/gains climbed 90 basis points to 14.8%. Interest expenses decreased 15% to $20.1 million. Balance Sheet
Exiting the third quarter, Fortune Brands’ cash and cash equivalents were $464.5 million, up 19.7% from $387.9 million at the end of 2019. Its long-term debt declined 7.1% to $2,086.5 million sequentially.
In the first nine months of 2020, net cash generated by operating activities was $506.8 million compared with $353.8 million in the year-ago period. Capital expenditure amounted to $66.2 million, down from $82.4 million. Outlook
For 2020, Fortune Brands anticipates net sales to increase 4-5% over the previous year. Earnings before charges/gains are estimated to be $4.03-$4.11 per share. Also, it anticipates to generate free cash flow of $590-$620 million.
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks are Kaman Corporation ( KAMN Quick Quote KAMN - Free Report) , Dover Corporation ( DOV Quick Quote DOV - Free Report) and IDEX Corporation ( IEX Quick Quote IEX - Free Report) . All these companies carry a Zacks Rank #2. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Kaman delivered a positive earnings surprise of 30.42%, on average, in the trailing four quarters. Dover delivered a positive earnings surprise of 18.10%, on average, in the trailing four quarters. IDEX delivered a positive earnings surprise of 6.80%, on average, in the trailing four quarters. Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot stocks we're targeting >>