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Fortune Brands Teams Up With Renoworks to Boost Offerings

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Therma-Tru Corp — a leading entry door brand of Fortune Brands Home & Security, Inc. (FBHS - Free Report) — recently teamed up with Renoworks Software Inc. to integrate its Design Your Door tool with the Renoworks home visualization platform. With this integration, homeowners will be able to view the latest library of Therma-Tru doors in their homes with participating Renoworks dealers.

The partnership will leverage Renoworks’ modern third-party integration capabilities to create a seamless experience for homeowners. Notably, the partnership will facilitate the use of Therma-Tru’s Design Your Door experience across all Renoworks visualization technology solutions where Therma-Tru products are available.

Our Take

For 2018, the company lowered sales growth projection for its Cabinets segment. It is now anticipating growth in the low-single-digit range versus mid-single digit predicted earlier. Also, on a P/E (TTM basis), the stock looks overvalued compared with the industry, based on respective tallies of 17.8x and 15.8x in the past three months.

In the past three months, the Zacks Rank #4 (Sell) stock has lost 6% against the industry’s rise of 2.3%.

Moreover, of late, the company has been suffering from higher costs and expenses, which weighed on margins in first-quarter 2018.  In the quarter, operating margin slipped 10 basis points. We believe that unwarranted rise in expenses might affect Fortune Brands’ performance going forward as well.

Further, analysts have become increasingly bearish on Fortune Brands, as the Zacks Consensus Estimate for 2018 earnings has trended down over the past couple of months, from $3.63 to $3.62, led by one downward estimate revision versus none upward.

Stocks to Consider

Some better-ranked stocks from the same space are Atkore International Group Inc. (ATKR - Free Report) , Johnson Controls International plc (JCI - Free Report) and Welbilt, Inc. (WBT - Free Report) . While Atkore International Group sports a Zacks Rank #1 (Strong Buy), Johnson Controls International and Welbilt carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Atkore International Group surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 16.81%.

Johnson Controls International surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 1.95%.

Welbilt outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 14.60%.

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