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Here's Why You Should Consider Betting on Fortune Brands (FBHS)
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Fortune Brands Home & Security, Inc. currently boasts robust growth prospects on strength in its businesses, solid product portfolio, investments in product innovation and a sound capital-deployment strategy.
The Zacks Rank #2 (Buy) company has a market capitalization of $11.7 billion. In the past six months, it has gained 44.6% compared with the industry’s growth of 24.5%.
Let’s delve onto the factors that make investment in the company a smart choice at the moment.
Business Strength: Fortune Brands is poised to benefit from the strength in the U.S. housing market, supported by expected new construction growth and product launches. Going forward, solid momentum across the company’s plumbing business, driven by a strong suite of brands and success of its category and channel expansion strategies will drive its top-line performance. Moreover, strong demand for doors and decking products, along with strength in its security business, is likely to be a tailwind.
Also, it has been gaining from strength in its Fiberon business (acquired in September 2018). The business is complementing its existing door brand — Therma-Tru — and enhancing growth opportunities in the outdoor living space. Further, the company’s investment in capacity and product line expansion in security, and the Fiberon businesses bode well. Notably, Fiberon decking brand grew more than 40%, in the third quarter of 2020.
Sound Capital Allocation Strategies: In September 2020, the company’s board of directors approved a $500-million share repurchase plan. The buyback program is valid till Sep 21, 2022. It’s worth mentioning here that in the first nine months of 2020, it repurchased shares worth $150 million (no repurchasing activities were made in the second and third quarters) and paid out dividends worth $99.9 million. Also, in December 2020, it announced an 8% hike in its quarterly dividend rate.
Initiatives: Fortune Brands’ focus on supply-chain optimization, operational efficiency, cost-control measures and other initiatives have been in driving its profitability and aiding it to maintain a healthy margin performance. For instance, in the third quarter, its operating margin climbed 90 basis points on a year-over-year basis to 14.8%.
In the past 60 days, the Zacks Consensus Estimate for its 2020 earnings has trended up from $3.85 to $4.09 on seven upward estimate revisions against none downward.
Allegion delivered a positive earnings surprise of 17.48%, on average, in the trailing four quarters.
Brady delivered a positive earnings surprise of 2.95%, on average, in the trailing four quarters.
Resideo delivered a positive earnings surprise of 212.23%, 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.
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Here's Why You Should Consider Betting on Fortune Brands (FBHS)
Fortune Brands Home & Security, Inc. currently boasts robust growth prospects on strength in its businesses, solid product portfolio, investments in product innovation and a sound capital-deployment strategy.
The Zacks Rank #2 (Buy) company has a market capitalization of $11.7 billion. In the past six months, it has gained 44.6% compared with the industry’s growth of 24.5%.
Let’s delve onto the factors that make investment in the company a smart choice at the moment.
Business Strength: Fortune Brands is poised to benefit from the strength in the U.S. housing market, supported by expected new construction growth and product launches. Going forward, solid momentum across the company’s plumbing business, driven by a strong suite of brands and success of its category and channel expansion strategies will drive its top-line performance. Moreover, strong demand for doors and decking products, along with strength in its security business, is likely to be a tailwind.
Also, it has been gaining from strength in its Fiberon business (acquired in September 2018). The business is complementing its existing door brand — Therma-Tru — and enhancing growth opportunities in the outdoor living space. Further, the company’s investment in capacity and product line expansion in security, and the Fiberon businesses bode well. Notably, Fiberon decking brand grew more than 40%, in the third quarter of 2020.
Sound Capital Allocation Strategies: In September 2020, the company’s board of directors approved a $500-million share repurchase plan. The buyback program is valid till Sep 21, 2022. It’s worth mentioning here that in the first nine months of 2020, it repurchased shares worth $150 million (no repurchasing activities were made in the second and third quarters) and paid out dividends worth $99.9 million. Also, in December 2020, it announced an 8% hike in its quarterly dividend rate.
Initiatives: Fortune Brands’ focus on supply-chain optimization, operational efficiency, cost-control measures and other initiatives have been in driving its profitability and aiding it to maintain a healthy margin performance. For instance, in the third quarter, its operating margin climbed 90 basis points on a year-over-year basis to 14.8%.
In the past 60 days, the Zacks Consensus Estimate for its 2020 earnings has trended up from $3.85 to $4.09 on seven upward estimate revisions against none downward.
Other Key Picks
Some other top-ranked stocks from the same space are Allegion plc (ALLE - Free Report) , Brady Corporation (BRC - Free Report) and Resideo Technologies, Inc. (REZI - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Allegion delivered a positive earnings surprise of 17.48%, on average, in the trailing four quarters.
Brady delivered a positive earnings surprise of 2.95%, on average, in the trailing four quarters.
Resideo delivered a positive earnings surprise of 212.23%, 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 >>