How Do Analysts See Fortune Brands Home & Security, Inc. (NYSE:FBHS) Performing In The Years Ahead?
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Fortune Brands Home & Security, Inc.’s (NYSE:FBHS) most recent earnings announcement in December 2018 confirmed that the business experienced a significant headwind with earnings deteriorating by -18%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Fortune Brands Home & Security’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Fortune Brands Home & Security
Analysts’ outlook for this coming year seems optimistic, with earnings increasing by a robust 31%. This growth seems to continue into the following year with rates reaching double digit 44% compared to today’s earnings, and finally hitting US$585m by 2022.
While it’s informative understanding the growth each year relative to today’s level, it may be more insightful estimating the rate at which the business is growing every year, on average. The advantage of this technique is that we can get a bigger picture of the direction of Fortune Brands Home & Security’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 9.9%. This means that, we can expect Fortune Brands Home & Security will grow its earnings by 9.9% every year for the next couple of years.
Next Steps:
For Fortune Brands Home & Security, I’ve put together three important aspects you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is FBHS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FBHS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FBHS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
