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Fortune Brands (FBHS) to Acquire LARSON, Renames Segment

Zacks Equity Research
·4 min read

Fortune Brands Home & Security, Inc. FBHS, on Nov 17, announced that it entered into a contract to buy LARSON Manufacturing, a major brand of storm and screen doors in North America. The deal worth about $660 million, is expected to be completed within a month, subject to the fulfilment of customary closing conditions. Also, the company renamed one of its operating segments.

Fortune Brands’ shares jumped 0.9% yesterday to close at $83.39.

Based in Brookings, SD, LARSON is the largest producer of storm doors and storm windows in the United States. Its product portfolio also includes related outdoor living products like porch window and retractable screens. It has a strong marketing channel, comprising eight distribution centers across the United States.

Details of Buyout

The addition of LARSON’s extensive portfolio with its strong innovation capabilities will enable Fortune Brands to expand its range of product offerings, particularly in the exterior doors category. In addition, LARSON’s solid distribution network and strong customer base will be advantageous for Fortune Brands.

Fortune Brands believes that the acquisition will complement its existing door brand — Therma-Tru — and will further enhance its opportunities in the growing door, security and outdoor living markets in the United States. The acquisition is also expected to be immediately accretive to Fortune Brands’ earnings per share.

Concurrently, Fortune Brands announced the renaming of its “Doors & Security” segment to “Outdoors & Security” for better representation of its brands and further aligning the segment with the company’s growth strategy. On completion of the deal, LARSON will be combined with the Outdoors & Security segment.

Zacks Rank, Estimates and Price Performance

Fortune Brands, with $11.6-billion market capitalization, currently carries a Zacks Rank #2 (Buy). It is poised to benefit from solid product portfolio and strength in its operating segments, going forward. Also, solid momentum across its Fiberon business and investments in product innovation are likely to be beneficial.

In the past 30 days, earnings estimates for the company have been raised. The Zacks Consensus Estimate for its earnings is pegged at $4.10 for 2020 and $4.66 for 2021, up 6.5% and 8.6% from the respective 30-day-ago figures.

The company’s shares have gained 40.9% compared with 34.9% growth recorded by the industry in the past six months.

Other Stocks to Consider

Some other top-ranked stocks from the Zacks Industrial Products sector are Altra Industrial Motion Corp. AIMC, Applied Industrial Technologies, Inc. AIT and Allegion plc ALLE. While Altra Industrial sports a Zacks Rank #1 (Strong Buy), Applied Industrial and Allegion carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Altra Industrial delivered a positive earnings surprise of 50.07%, on average, in the trailing four quarters.

Applied Industrial delivered a positive earnings surprise of 14.68%, on average, in the trailing four quarters.

Allegion delivered a positive earnings surprise of 17.48%, on average, in the trailing four quarters.

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Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
 
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