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Fortune Brands (FBHS) to Post Q1 Earnings: What's in the Offing?

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·4 min read
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Fortune Brands Home & Security, Inc. FBHS is scheduled to report first-quarter 2021 results on Apr 29, after market close.

The company delivered better-than-expected results in each of the trailing four quarters. Earnings surprise for the last four quarters was a positive 24.18%, on average. In the last reported quarter, it posted earnings of $1.25 per share, which beat the Zacks Consensus Estimate of $1.16 by 7.76%.

In the past three months, the company has gained 20% compared with the industry’s growth of 32.9%.

Factors at Play

Strength across Fortune Brands’ plumbing business, supported by growing popularity of brands and the success of its category and channel expansion strategies, is expected to have boosted its Plumbing segment’s revenues in the first quarter. Also, solid demand for doors and decking products, coupled with strength in its security business, is likely to have augmented revenues of the Outdoors & Security segment. Also, strong demand for its value price point cabinetry products might have supported the Cabinets segment’s top line.

Also, the company’s Fiberon business, which has been augmenting its existing door brand — Therma-Tru — and enhancing its growth opportunities in the outdoor living space, is expected to have augmented its first-quarter revenues. Notably, the Fiberon decking brand grew more than 30% in the fourth quarter of 2020, a trend which is likely to have continued in the first quarter as well given strong demand for its products. In addition, the company’s LARSON Manufacturing buyout (December 2020) is anticipated to have augmented its performance.

Further, Fortune Brands’ focus on operational efficiency, cost-control measures and supply-chain optimization is likely to have helped it in maintaining a healthy margin performance in the quarter under review.

However, the company has been dealing with escalating cost of sales over the past few quarters. In the fourth quarter, its cost of sales and selling, general and administrative expenses jumped 12% and 17%, respectively, on a year-over-year basis. This might have weighed on its margins and profitability in the to-be reported quarter as well. In addition, given its significant presence in Canada, its operations are subject to unfavorable movement in foreign currencies. This might have hurt its business in the first quarter.

Amid this backdrop, the Zacks Consensus Estimate for the Plumbing segment's revenues is pegged at $529 million, suggesting growth of 12.7% from the year-ago reported number. The consensus estimate for Cabinets segment’s revenues stands at $670 million, implying growth of 8.1% from the reported figure in the year-ago quarter. The consensus mark for Outdoors & Security segment’s revenues stands at $437 million, implying a 39.2% year-over-year increase.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

But that is not the case here as we will see below.

Earnings ESP: Fortune Brands has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at $1.04.

Fortune Brands Home & Security, Inc. Price and EPS Surprise

Fortune Brands Home & Security, Inc. Price and EPS Surprise
Fortune Brands Home & Security, Inc. Price and EPS Surprise

Fortune Brands Home & Security, Inc. price-eps-surprise | Fortune Brands Home & Security, Inc. Quote

Zacks Rank: The company carries a Zacks Rank #3.

Key Picks

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Emerson Electric Co. EMR has an Earnings ESP of +3.62% and it currently carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Enersys ENS has an Earnings ESP of +0.78% and a Zacks Rank #3.

Eaton Corporation, plc ETN has an Earnings ESP of +1.96% and Zacks Rank #3.

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Emerson Electric Co. (EMR) : Free Stock Analysis Report

Eaton Corporation, PLC (ETN) : Free Stock Analysis Report

Fortune Brands Home & Security, Inc. (FBHS) : Free Stock Analysis Report

Enersys (ENS) : Free Stock Analysis Report

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