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With A -4.5% Earnings Drop, Did Fortune Brands Home & Security, Inc. (NYSE:FBHS) Really Underperform?

Simply Wall St

Measuring Fortune Brands Home & Security, Inc.'s (NYSE:FBHS) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess FBHS's recent performance announced on 30 September 2019 and compare these figures to its historical trend and industry movements.

See our latest analysis for Fortune Brands Home & Security

How Well Did FBHS Perform?

FBHS's trailing twelve-month earnings (from 30 September 2019) of US$413m has declined by -4.5% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 10%, indicating the rate at which FBHS is growing has slowed down. What could be happening here? Well, let's look at what's transpiring with margins and if the entire industry is feeling the heat.

NYSE:FBHS Income Statement, December 9th 2019

In terms of returns from investment, Fortune Brands Home & Security has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. Furthermore, its return on assets (ROA) of 8.1% is below the US Building industry of 8.5%, indicating Fortune Brands Home & Security's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Fortune Brands Home & Security’s debt level, has increased over the past 3 years from 14% to 15%.

What does this mean?

Fortune Brands Home & Security's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research Fortune Brands Home & Security to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for FBHS’s future growth? Take a look at our free research report of analyst consensus for FBHS’s outlook.
  2. Financial Health: Are FBHS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.