We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Fortune Brands (FBHS) Beats on Q4 Earnings, Stock Rises
Read MoreHide Full Article
Keeping its positive earnings surprise trend alive for the fifth straight quarter, Fortune Brands Home & Security Inc. posted better-than-expected earnings results for fourth-quarter 2016. However, top line missed estimates and grew year over year.
Adjusted earnings of 71 cents per share in the fourth quarter rose 26.8% year over year and surpassed the Zacks Consensus Estimate of 69 cents. On a GAAP basis, Fortune Brands’ earnings surged 24.1% to 67 cents per share.
Shares of Fortune Brands rose 3.1% in the after-hours trading session on Jan 31, following the solid fourth-quarter earnings results. Overall, the company’s shares have grown 18.4% in the past one year, underperforming the Zacks categorized Security and Safety Services industry’s growth of 29.9%.
Net sales for the fourth quarter advanced 6.3% year over year to $1,301.6 million but fell short of the Zacks Consensus Estimate of $1,310 million. The year-over-year increase came on the back of accelerated sales growth in the U.S., led by Plumbing.
Adjusted operating income improved about 18% to $172.8 million, while adjusted operating margin expanded a substantial 130 basis points (bps) to roughly 13.3%. The solid margin growth was driven by robust performance across all operating segments and organic operating leverage of 45%.
2016 Results
For full-year 2016, Fortune Brands posted adjusted earnings from continuing operations of $2.75 per share, a penny ahead of the Zacks Consensus Estimate. Moreover, earnings grew 33% from the prior-year earnings per share of $2.07. Including one-time items, full-year earnings increased 38.8% to $2.61 per share.
Net sales in 2016 grew 8.9% year over year to $4,984.9 million, but were short of the Zacks Consensus Estimate of $4,993 million.
Segment Details
Sales at the Cabinet segment edged down 1% to $600.6 million in the fourth quarter, mainly accounting for the calendar shift that negatively impacted sales. Adjusted segment operating income rose 4% to $63.8 million, with adjusted operating margin expanding 60 bps to 10.6%.
The Plumbing segment’s sales in the fourth quarter escalated 19% to $426.4 million. Excluding recent acquisitions, the Plumbing segment posted sales gains in the low-double digits range on the back of revived focus on sales and marketing, particularly on Global Plumbing Group structure and new products. Adjusted operating income for the segment climbed 23% to $87.7 million, while operating margin increased 80 bps to 20.6%.
The Door segment’s sales grew 6% to $121.7 million in the quarter, backed by strength witnessed at both the retail and wholesale networks. The segment’s adjusted operating income surged 22% to $16.2 million. Adjusted operating margin for the segment expanded 170 bps to 13.3%.
Sales at the Security segment increased 6% to $152.9 million in the quarter. Adjusted operating income for the segment jumped 28% to $23.9 million, while operating margin grew 260 bps to 15.6%.
Financial Details
Fortune Brands ended 2016 with cash and cash equivalents of $251.5 million, and long-term debt (excluding current portion) of $1,431.1 million. Shareholders’ equity (excluding non-controlling interests) as of Dec 31, 2016, was $2,361.5 million.
Looking Ahead
Following a solid end to 2016, the company provided its outlook for 2017. Fortune Brands expects the positive momentum witnessed in 2016 to continue this year, driven basically by sturdy execution and market growth. The company anticipates the U.S. home products market to grow 6–7% in 2017, while the global market is expected to grow 5–6%.
Management envisions sales to advance in a range of 6–8% in 2017. Adjusted earnings for 2017 are anticipated in the band of $2.95–$3.05 per share, compared with $2.75 reported in 2016. At midpoint, this represents a 14% growth from 2016. On a GAAP basis, the company anticipates earnings per share of $2.93–$3.03 for 2017.
Fortune Brands Home & Security, Inc. Price, Consensus and EPS Surprise
Fortune Brands currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the same industry include Allegion plc (ALLE - Free Report) and Lakeland Industries Inc. (LAKE - Free Report) , both carrying a Zacks Rank #2 (Buy). Another stock worth considering in the broader Industrial Products sector is Rockwell Automation Inc. (ROK - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Allegion, with a long-term earnings growth rate of 13.2%, has surged nearly 11.8% in the past one year.
Lakeland Industries, with a long-term earnings growth rate of 10%, has recorded a growth of 11.1% in the last six months.
Rockwell Automation has jumped 59.6% in the past one year. The stock has a long-term earnings growth rate of 7.6%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Fortune Brands (FBHS) Beats on Q4 Earnings, Stock Rises
Keeping its positive earnings surprise trend alive for the fifth straight quarter, Fortune Brands Home & Security Inc. posted better-than-expected earnings results for fourth-quarter 2016. However, top line missed estimates and grew year over year.
Adjusted earnings of 71 cents per share in the fourth quarter rose 26.8% year over year and surpassed the Zacks Consensus Estimate of 69 cents. On a GAAP basis, Fortune Brands’ earnings surged 24.1% to 67 cents per share.
Shares of Fortune Brands rose 3.1% in the after-hours trading session on Jan 31, following the solid fourth-quarter earnings results. Overall, the company’s shares have grown 18.4% in the past one year, underperforming the Zacks categorized Security and Safety Services industry’s growth of 29.9%.
Net sales for the fourth quarter advanced 6.3% year over year to $1,301.6 million but fell short of the Zacks Consensus Estimate of $1,310 million. The year-over-year increase came on the back of accelerated sales growth in the U.S., led by Plumbing.
Adjusted operating income improved about 18% to $172.8 million, while adjusted operating margin expanded a substantial 130 basis points (bps) to roughly 13.3%. The solid margin growth was driven by robust performance across all operating segments and organic operating leverage of 45%.
2016 Results
For full-year 2016, Fortune Brands posted adjusted earnings from continuing operations of $2.75 per share, a penny ahead of the Zacks Consensus Estimate. Moreover, earnings grew 33% from the prior-year earnings per share of $2.07. Including one-time items, full-year earnings increased 38.8% to $2.61 per share.
Net sales in 2016 grew 8.9% year over year to $4,984.9 million, but were short of the Zacks Consensus Estimate of $4,993 million.
Segment Details
Sales at the Cabinet segment edged down 1% to $600.6 million in the fourth quarter, mainly accounting for the calendar shift that negatively impacted sales. Adjusted segment operating income rose 4% to $63.8 million, with adjusted operating margin expanding 60 bps to 10.6%.
The Plumbing segment’s sales in the fourth quarter escalated 19% to $426.4 million. Excluding recent acquisitions, the Plumbing segment posted sales gains in the low-double digits range on the back of revived focus on sales and marketing, particularly on Global Plumbing Group structure and new products. Adjusted operating income for the segment climbed 23% to $87.7 million, while operating margin increased 80 bps to 20.6%.
The Door segment’s sales grew 6% to $121.7 million in the quarter, backed by strength witnessed at both the retail and wholesale networks. The segment’s adjusted operating income surged 22% to $16.2 million. Adjusted operating margin for the segment expanded 170 bps to 13.3%.
Sales at the Security segment increased 6% to $152.9 million in the quarter. Adjusted operating income for the segment jumped 28% to $23.9 million, while operating margin grew 260 bps to 15.6%.
Financial Details
Fortune Brands ended 2016 with cash and cash equivalents of $251.5 million, and long-term debt (excluding current portion) of $1,431.1 million. Shareholders’ equity (excluding non-controlling interests) as of Dec 31, 2016, was $2,361.5 million.
Looking Ahead
Following a solid end to 2016, the company provided its outlook for 2017. Fortune Brands expects the positive momentum witnessed in 2016 to continue this year, driven basically by sturdy execution and market growth. The company anticipates the U.S. home products market to grow 6–7% in 2017, while the global market is expected to grow 5–6%.
Management envisions sales to advance in a range of 6–8% in 2017. Adjusted earnings for 2017 are anticipated in the band of $2.95–$3.05 per share, compared with $2.75 reported in 2016. At midpoint, this represents a 14% growth from 2016. On a GAAP basis, the company anticipates earnings per share of $2.93–$3.03 for 2017.
Fortune Brands Home & Security, Inc. Price, Consensus and EPS Surprise
Fortune Brands Home & Security, Inc. Price, Consensus and EPS Surprise | Fortune Brands Home & Security, Inc. Quote
Zacks Rank
Fortune Brands currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the same industry include Allegion plc (ALLE - Free Report) and Lakeland Industries Inc. (LAKE - Free Report) , both carrying a Zacks Rank #2 (Buy). Another stock worth considering in the broader Industrial Products sector is Rockwell Automation Inc. (ROK - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Allegion, with a long-term earnings growth rate of 13.2%, has surged nearly 11.8% in the past one year.
Lakeland Industries, with a long-term earnings growth rate of 10%, has recorded a growth of 11.1% in the last six months.
Rockwell Automation has jumped 59.6% in the past one year. The stock has a long-term earnings growth rate of 7.6%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>