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Fortune Brands Gains 39.4% in 3 Months: What's Driving it?

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Zacks Equity Research
·3 min read
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Fortune Brands Home Security, Inc.’s FBHS performance has been impressive in the past three months, which is evident from a 39.4% increase in its share price. Solid product offerings, accretive acquisitions, rewards to shareholders and investments in core competencies boosted market sentiments.

The Deerfield, IL-based company, with $12.3 billion of market capitalization, belongs to the Zacks Security and Safety Services industry. It currently carries a Zacks Rank #2 (Buy).



In the past three months, Fortune Brands has outperformed its industry’s growth of 11.6% and the S&P 500’s increase of 6.3%.

Factors Favoring the Stock

Fortune Brands has been gaining from the thriving plumbing business, driven by a strong suite of brands and success of its category and channel expansion strategies. Also, strength in its doors and security businesses, along with solid demand for decking products, is likely to continue enhancing revenues of its Doors & Security segment. Moreover, growing popularity of the company’s value price point cabinetry products bodes well for its Cabinets segment.

Also, Fortune Brands has enhanced its competency through acquisitions. For instance, its buyout of Fiberon (September 2018) strengthened its existing door brand — Therma-Tru — and enhanced growth opportunities in the outdoor living space. Further, the company invested in capacity and product line expansion in the security business, and the acquired Fiberon business. Notably, in the second quarter of 2020, Fiberon decking brand grew in the mid-teens range.

Moreover, the company follows sound capital-allocation strategies, aiming to improve values for shareholders. In September 2020, its board of directors approved a buyback program, under which the company will be able to repurchase up to $500 million shares. The buyback program is valid till Sep 21, 2022. It’s worth mentioning here that in the first half of 2020, Fortune Brands repurchased shares worth $150 million and paid out dividends worth $66.6 million. Also, in December 2019, it announced a 9% hike in its quarterly dividend rate.

In addition, several cost-control measures, including the reduction of operating expenses and non-essential capital expenditure, will enable it maintain a healthy margin performance.

Other Key Picks

Some other top-ranked stocks from the same space are Lakeland Industries, Inc. LAKE, Johnson Controls International plc JCI and NortonLifeLock Inc. NLOK. While Lakeland Industries currently sports a Zacks Rank #1 (Strong Buy), Johnson Controls and NortonLifeLock carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lakeland Industries delivered a positive earnings surprise of 263.66%, on average, in the trailing four quarters.

Johnson Controls delivered a positive earnings surprise of 13.11%, on average, in the trailing four quarters.

NortonLifeLock delivered a positive earnings surprise of 59.96%, on average, in the trailing four quarters.

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Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
Fortune Brands Home Security, Inc. (FBHS) : Free Stock Analysis Report
 
Lakeland Industries, Inc. (LAKE) : Free Stock Analysis Report
 
NortonLifeLock Inc. (NLOK) : Free Stock Analysis Report
 
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