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Fortune Brands (FBHS) to Post Q1 Earnings: What's in Store?

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Fortune Brands Home & Security, Inc. (FBHS - Free Report) is scheduled to report first-quarter 2022 results on Apr 28, after market close.

FBHS reported better-than-expected results in each of the trailing four quarters. Earnings surprise in the last four quarters was 12.78%, on average.  In the last reported quarter, it posted earnings of $1.32 per share, which beat the Zacks Consensus Estimate of $1.30 by 1.5%.
 

Zacks Investment Research
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In the past three months, the stock has lost 21.8% compared with the industry’s decline of 15%.

Factors at Play

Fortune Brands is anticipated to have benefited from a strong momentum in the U.S. housing market, supported by growth in new construction and repair & remodel and product launches in first-quarter 2022. Solid momentum in FBHS’ plumbing business, driven by growing popularity of brands and incremental investments in brands and customer service, is likely to have boosted its performance in the to-be-reported quarter. Solid momentum in FBHS’ plumbing business, driven by the growing popularity of brands and incremental investments in brands and customer service, is likely to have boosted its performance in the to-be-reported quarter.

Fortune Brands’ Fiberon business (acquired in September 2018), which enhanced growth opportunities in the outdoor living space and complements its existing door brand Therma-Tru, is anticipated to have augmented its first-quarter revenues. Also, FBHS’ buyout of LARSON Manufacturing (December 2020) expanded its offering in outdoor living and strengthened its foothold in the doors and decking space. This, in turn, is also likely to have boosted its performance in the first quarter.

Despite strength across the end markets, inflation in cost of sales and operating expenses is expected to have adversely impacted Fortune Brands’ performance in the first quarter. FBHS’ cost of sales and its selling, general and administrative expenses jumped 20.9% and 13.4%, respectively, in fourth-quarter 2021 on a year-over-year basis. Fortune Brands has been witnessing raw-material inflation, supply-chain constraints and labor shortage for a while despite intensifying focus on supply-chain optimization, which might have dented its profitability in the to-be-reported quarter.

The Zacks Consensus Estimate for the Plumbing segment's revenues is pegged at $640 million, suggesting growth of 2.9% from the year-ago quarter’s reported number but a 9.1% decline sequentially. The consensus estimate for the Cabinets segment’s revenues stands at $733 million, indicating growth of 6.5% from the prior-year quarter’s reported number but a 1.6% dip from the prior-quarter level. The consensus mark for the Outdoors & Security segment’s revenues stands at $487 million, implying 5.4% growth from the year-earlier quarter’s actuals but a 5.3% decline sequentially.

The consensus estimate for Fortune Brands’ first-quarter total revenues is currently pegged at $1,872 million, suggesting growth of 5.7% from the year-ago quarter’s reported figure but a decline of 4.6% sequentially. The consensus estimate for earnings of $1.24 indicates a decline of 8.8% from the year-earlier period’s reading and a 6.1% fall sequentially.

Earnings Whispers

Our quantitative model does not predict an earnings beat for Fortune Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) increases the odds of an earnings beat. But that is not the case here, as we will see below.

Earnings ESP: Fortune Brands has an Earnings ESP of +2.75%, as the Most Accurate Estimate is pegged at $1.27, higher than the Zacks Consensus Estimate of $1.24.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 

Zacks Rank: Fortune Brands carries a Zacks Rank #4 (Sell) at present.

Stocks to Consider

Here are some companies worth considering as according to our model, these have the right combination of elements to beat on earnings this reporting cycle.

AutoNation, Inc. (AN - Free Report) has an Earnings ESP of +2.68% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

AN’s earnings surprise in the last four quarters was 27.4%, on average. In the past 60 days, AutoNation’s earnings estimates have increased 16% for 2022. AN’s shares have gained 7.6% in the past three months.

FIGS, Inc. (FIGS - Free Report) has an Earnings ESP of +7.14% and a Zacks Rank #2, currently. FIGS delivered a trailing four-quarter earnings surprise of 258.7%, on average.

Earnings estimates of FIGS have increased 16% for 2022 in the past 60 days. The stock has declined 23.3% in the past three months.

Lithia Motors, Inc. (LAD - Free Report) has an Earnings ESP of +8.92% and a Zacks Rank #3, currently. LAD’s earnings surprise in the last four quarters was 30.5%, on average.

In the past 60 days, LAD’s earnings estimates have increased 14.3% for 2022. The stock has dipped 1.5% in the past three months.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.