Will Fortune Brands (FBHS) Earnings Surprise This Season? - Analyst Blog
Fortune Brands Home & Security Inc. (FBHS) is slated to report its fourth-quarter 2014 results on Feb 4, after the closing bell. In the last quarter, the company had delivered a negative earnings surprise of 1.8%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
With constant focus on solidifying its product portfolio and investing in future growth, Fortune Brands has been making investments in designing, planning and implementing additional capacity. Although these efforts are expected to facilitate substantial growth, they are likely to take time owing to sluggish market conditions.
Further, based on the assumption that the U.S. home products market will grow 4%–5% this quarter, management expects adjusted earnings per share for 2014 to be in the band of $1.84–$1.86. Meanwhile, in the trailing four quarters the company delivered an average negative earnings surprise of 5.2%, which makes us cautious of its upcoming performance.
Earnings Whispers
Our proven model does not conclusively show that Fortune Brands is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 50 cents.
Zacks Rank: Fortune Brands carries a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #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 companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Kroger Co. (KR) has an Earnings ESP of +2.27% and a Zacks Rank #2 (Buy).
J. C. Penney Company Inc. (JCP) has an Earnings ESP of +23.08% and a Zacks Rank #2.
Ross Stores Inc. (ROST) has an Earnings ESP of +2.70% and a Zacks Rank #2.
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FORTUNE BRD H&S (FBHS): Free Stock Analysis Report
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