Will Fortune Brands (FBHS) Disappoint This Earnings Season?
Fortune Brands Home & Security Inc. (FBHS) is scheduled to report its third-quarter fiscal 2014 results after the market closes on Oct 29. Last quarter, this home and security products providing company posted in-line earnings. Let's see how things are shaping up for this announcement.
Factors Affecting the Upcoming Quarter
The U.S. home products market’s growth for 2014 is now estimated at 6%–8%, hence the company has trimmed its forecast for the full year in spite of delivering in-line results for the second quarter. Moreover, based on this assumption and despite expected benefits from the Sentry Safe acquisition, the company trimmed its sales and earnings forecast for fiscal 2014.
The company now projects sales growth of nearly 9%–11% and earnings per share of $1.88–$1.96, respectively, as against 10%–12% and $1.90–$1.99 per share projected earlier. Based on the decline in the U.S. home products market projected for the rest of 2014, we expect the company to post soft results in the upcoming quarter.
Earnings Whispers?
Our proven model does not conclusively project Fortune Brands as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:
Zacks ESP: ESP for Fortune Brands is 0.00% since the Most Accurate estimate stands at 56 cents per share, which is in line with the Zacks Consensus Estimate.
Zacks Rank #4 (Sell): Fortune Brands’ Zacks Rank #4 when combined with a zero ESP makes surprise prediction unlikely. We caution against stocks with a Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
L Brands Inc.’s (LB) Earnings ESP stands at +3.13% and it carries a Zacks Rank #2 (Buy).
The New York Times Company (NYT) has an Earnings ESP of +100.0% and a Zacks Rank #2.
Home Depot Inc. (HD) with an Earnings ESP of +0.89% holds a Zacks Rank #3 (Hold).
Read the Full Research Report on FBHS
Read the Full Research Report on HD
Read the Full Research Report on NYT
Read the Full Research Report on LB
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