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Fortune Brands (FBHS) Boosts Outdoor Business With LARSON Buyout

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Fortune Brands Home & Security, Inc. (FBHS - Free Report) yesterday announced that it completed the acquisition of Brookings, SD-based LARSON Manufacturing. The acquisition was valued at $660 million, net of tax benefits.

It is worth mentioning here that the company announced this buyout deal on Nov 17, 2020.

LARSON is a well-known name in the storm door market of the United States. It specializes in manufacturing storm doors and storm windows as well as outdoor living products, including retractable screens and porch windows. It has a strong marketing channel and multiple distribution centers across the United States. Its revenues and employee strength are $390 million and 1,200, respectively.

Inside the Headlines

As noted, Fortune Brands paid the acquisition price with available cash and borrowings it made under the revolving credit facility. The buyout is anticipated to solidify the company’s footholds in the doors and decking space by expanding its offering for outdoor living. To be precise, LARSON will complement the company’s existing door brand — Therma-Tru.

Further, LARSON’s solid customer base, efficient management team, innovative capabilities and solid distribution network are added advantages for Fortune Brands.

In financial terms, Fortune Brands anticipates the LARSON buyout to boost its earnings immediately, while adding as much as 14-20 cents per share to the bottom line in 2021. The expected accretion to earnings is net of purchase price amortization and interest expenses.

With the buyout now complete, LASON is now part of Fortune Brands’ Outdoors & Security segment. Notably, the segment was earlier known as Doors & Security. The renaming was done for better representation of brands and alignment of the segment with the company’s growth strategy.

Zacks Rank, Estimates and Price Performance

With an $11.6-billion market capitalization, Fortune Brands currently carries a Zacks Rank #2 (Buy). It is poised to benefit from strength in the plumbing business, supply-chain optimization actions, cost-control measures, acquisitions and effective capital allocation strategies.

In the past three months, the company’s shares decreased 2.5% as compared with the industry’s growth of 7.5%.




 

Meanwhile, the Zacks Consensus Estimate for its earnings is pegged at $4.09 for 2020 and $4.73 for 2021, reflecting growth of 6.2% and 10.5% from the respective 60-day-ago figures. Also, the estimate for the fourth quarter at $1.16 suggests an increase of 9.4% from the two-month ago number.

Fortune Brands Home & Security, Inc. Price and Consensus

 

Fortune Brands Home & Security, Inc. Price and Consensus

Fortune Brands Home & Security, Inc. price-consensus-chart | Fortune Brands Home & Security, Inc. Quote

Other Stocks to Consider

Some other top-ranked stocks in the industry are Ituran Location and Control Ltd. (ITRN - Free Report) , Lakeland Industries, Inc. (LAKE - Free Report) and Brady Corporation (BRC - Free Report) . While both Ituran Location and Lakeland currently sport a Zacks Rank #1 (Strong Buy), Brady carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for Ituran Location and Brady improved for the current year, while have been stable for Lakeland. Also, its earnings surprise for the last reported quarter was 66.67% for Ituran Location, 100% for Lakeland and 10.34% for Brady.

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