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Fortune Brands (FBHS) Q4 Earnings & Revenues Top Estimates

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Zacks Equity Research
·4 min read
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Fortune Brands Home & Security, Inc. FBHS reported fourth-quarter 2020 earnings before charges/gains of $1.25 per share, surpassing the Zacks Consensus Estimate of $1.16 by 7.8%. On a year-over-year basis, the bottom line increased 25% on the back of sales growth.

In 2020, the company’s earnings before charges/gains came in at $4.19, higher than $3.60 in the previous year.

In the fourth quarter, Fortune Brands’ net sales were $1,659.7 million, increasing 13% from the year-ago figure. The improvement was driven by solid performance across all of its segments. Also, the top line beat the consensus estimate of $1,618 million by 2.6%.

In 2020, the company’s net sales were $6,090.3 million, reflecting an increase of 6% year over year.

Segmental Details

Quarterly net sales for Cabinets grew 11% year over year to $655.5 million. Results were driven by continued solid demand for the company’s products.

Plumbing net sales increased 16% year over year to $637.7 million. Results were driven by impressive performance across the business.

Outdoors & Security’s net sales increased 11% to $366.5 million on the back of double-digit sales growth for composite decking and doors products.

Costs & Expenses

In the fourth quarter, Fortune Brands’ cost of sales increased 12% year over year to $1,052 million. It represented 63.4% of net sales compared with 63.8% in the year-ago quarter. Selling, general and administrative expenses increased 17% to $364.2 million, and represented 21.9% of the net sales compared with 21.2% a year ago.

Operating income before charges/gains increased 19% to $246.4 million. Operating margin before charges/gains climbed 70 basis points to 14.8%. Interest expenses decreased 13% to $19.5 million.

Balance Sheet

Exiting 2020, Fortune Brands’ cash and cash equivalents were $419.1 million, up 8% from $387.9 million at the end of 2019. Its long-term debt increased 23.3% to $2,572.2 million sequentially.

In 2020, net cash generated by operating activities was $825.7 million compared with $637.2 million a year ago. Capital expenditure amounted to $150.5 million, up from $131.8 million.

Outlook

For 2021, Fortune Brands anticipates sales to increase 12.5-14.5% from the previous year. Earnings before charges/gains are estimated to be $4.85-$5.05 per share. Also, it anticipates to generate free cash flow of $600-$650 million.

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 & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are Franklin Electric Co., Inc. FELE, SPX FLOW, Inc. FLOW and Danaher Corporation DHR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Franklin Electric delivered a positive earnings surprise of 12.82%, on average, in the trailing four quarters.

SPX FLOW delivered a positive earnings surprise of 146.55%, on average, in the trailing four quarters.

Danaher delivered a positive earnings surprise of 19.86%, on average, in the trailing four quarters.

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