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Fortune Brands Home & Security, Inc. Just Beat EPS By 11%: Here's What Analysts Think Will Happen Next

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A week ago, Fortune Brands Home & Security, Inc. (NYSE:FBHS) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 7.9% to hit US$1.7b. Fortune Brands Home & Security reported statutory earnings per share (EPS) US$1.17, which was a notable 11% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Fortune Brands Home & Security

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earnings-and-revenue-growth

Following the latest results, Fortune Brands Home & Security's 14 analysts are now forecasting revenues of US$6.30b in 2021. This would be a reasonable 6.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 24% to US$4.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.15b and earnings per share (EPS) of US$4.30 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$89.43, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Fortune Brands Home & Security, with the most bullish analyst valuing it at US$103 and the most bearish at US$66.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Fortune Brands Home & Security's growth to accelerate, with the forecast 6.8% growth ranking favourably alongside historical growth of 5.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Fortune Brands Home & Security is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Fortune Brands Home & Security's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$89.43, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Fortune Brands Home & Security. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Fortune Brands Home & Security going out to 2022, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Fortune Brands Home & Security that you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.