It has been about a month since the last earnings report for Fortune Brands Home & Security . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fortune Brands Home & Security due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fortune Brands Q4 Earnings & Revenues Beat Estimates
Fortune Brands reported fourth-quarter 2021 earnings before charges/gains of $1.32 per share, which surpassed the Zacks Consensus Estimate of $1.30 by 1.54%. On a year-over-year basis, the bottom line increased 5.6% on the back of sales growth.
In 2021, the company’s earnings before charges/gains came in at $5.73, up 36.8% from $4.19 in 2020.
In the fourth quarter, Fortune Brands’ net sales were $1,962.8 million, increasing 18.3% from the year-ago figure. The improvement was driven by solid performance across all its segments. Also, the top line beat the consensus estimate of $1,927 million by 1.85%.
In 2021, the company’s net sales were $7,656.1 million, up 25.7% from $6,090.3 million in 2020.
Segmental Details
Cabinets’ quarterly net sales grew 14% year over year to $744.8 million. Results were driven by continued strong demand for the company’s products.
Plumbing net sales increased 10% year over year to $703.6 million. Results were driven by impressive performance across the business.
Outdoors & Security’s net sales increased 40% to $514.4 million on the back of solid sales growth for decking, doors and security products and positive contribution from the LARSON buyout.
Costs & Expenses
In the fourth quarter, Fortune Brands’ cost of sales increased 20.9% year over year to $1,271.9 million. It represented 64.8% of net sales compared with 63.4% in the year-ago quarter. Selling, general and administrative expenses increased 13.4% to $412.9 million and represented 21% of the net sales compared with 21.9% a year ago.
Operating income before charges/gains increased 7% to $263.7 million. Operating margin before charges/gains were 13.4%, down 140 basis points year over year. Interest expenses increased 8% to $21.1 million.
Balance Sheet
Exiting 2021, Fortune Brands’ cash and cash equivalents were $471.5 million, up 2.3% from $460.7 million at the end of the previous quarter. Its long-term debt decreased 12.1% to $2,309.8 million sequentially.
In 2021, net cash provided by operating activities was $688.7 million compared with $825.7 million a year ago. Capital expenditure amounted to $214.2 million, up from $150.5 million. In 2021, its free cash flow was $518.2 million, down 30.1%.
In 2021, the company rewarded shareholders with a dividend payout of $143 million. The amount represents growth of 7.3% year over year. Amount spent on purchasing treasury stock totaled $447.7 million, up 138.6%.
Outlook
Fortune Brands anticipates benefiting from strength in its housing end market and its focus on product innovation in the quarters ahead.
For 2022, the company expects sales to increase 5.5-7.5% from the previous year, based on its anticipation of U.S. home products market growth of 4-6%. Earnings before charges/gains are estimated to be $6.35-$6.55 per share, indicating growth of 11-14% year over year.
For 2022, cash flow from operations is anticipated to be $973-$1,108 million, while capital expenditures are likely to be $375-$425 million. It anticipates generating a free cash flow of $615-$700 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.09% due to these changes.
VGM Scores
At this time, Fortune Brands Home & Security has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fortune Brands Home & Security has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Fortune Brands Home & Security (FBHS) Down 4.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Fortune Brands Home & Security . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fortune Brands Home & Security due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fortune Brands Q4 Earnings & Revenues Beat Estimates
Fortune Brands reported fourth-quarter 2021 earnings before charges/gains of $1.32 per share, which surpassed the Zacks Consensus Estimate of $1.30 by 1.54%. On a year-over-year basis, the bottom line increased 5.6% on the back of sales growth.
In 2021, the company’s earnings before charges/gains came in at $5.73, up 36.8% from $4.19 in 2020.
In the fourth quarter, Fortune Brands’ net sales were $1,962.8 million, increasing 18.3% from the year-ago figure. The improvement was driven by solid performance across all its segments. Also, the top line beat the consensus estimate of $1,927 million by 1.85%.
In 2021, the company’s net sales were $7,656.1 million, up 25.7% from $6,090.3 million in 2020.
Segmental Details
Cabinets’ quarterly net sales grew 14% year over year to $744.8 million. Results were driven by continued strong demand for the company’s products.
Plumbing net sales increased 10% year over year to $703.6 million. Results were driven by impressive performance across the business.
Outdoors & Security’s net sales increased 40% to $514.4 million on the back of solid sales growth for decking, doors and security products and positive contribution from the LARSON buyout.
Costs & Expenses
In the fourth quarter, Fortune Brands’ cost of sales increased 20.9% year over year to $1,271.9 million. It represented 64.8% of net sales compared with 63.4% in the year-ago quarter. Selling, general and administrative expenses increased 13.4% to $412.9 million and represented 21% of the net sales compared with 21.9% a year ago.
Operating income before charges/gains increased 7% to $263.7 million. Operating margin before charges/gains were 13.4%, down 140 basis points year over year. Interest expenses increased 8% to $21.1 million.
Balance Sheet
Exiting 2021, Fortune Brands’ cash and cash equivalents were $471.5 million, up 2.3% from $460.7 million at the end of the previous quarter. Its long-term debt decreased 12.1% to $2,309.8 million sequentially.
In 2021, net cash provided by operating activities was $688.7 million compared with $825.7 million a year ago. Capital expenditure amounted to $214.2 million, up from $150.5 million. In 2021, its free cash flow was $518.2 million, down 30.1%.
In 2021, the company rewarded shareholders with a dividend payout of $143 million. The amount represents growth of 7.3% year over year. Amount spent on purchasing treasury stock totaled $447.7 million, up 138.6%.
Outlook
Fortune Brands anticipates benefiting from strength in its housing end market and its focus on product innovation in the quarters ahead.
For 2022, the company expects sales to increase 5.5-7.5% from the previous year, based on its anticipation of U.S. home products market growth of 4-6%. Earnings before charges/gains are estimated to be $6.35-$6.55 per share, indicating growth of 11-14% year over year.
For 2022, cash flow from operations is anticipated to be $973-$1,108 million, while capital expenditures are likely to be $375-$425 million. It anticipates generating a free cash flow of $615-$700 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.09% due to these changes.
VGM Scores
At this time, Fortune Brands Home & Security has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fortune Brands Home & Security has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.