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Macquarie Rated Fortune Brands Home & Security as ‘Outperform’

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Nov. 20 2020, Updated 4:59 p.m. ET

Price movement

Fortune Brands Home & Security (FBHS) has a market cap of $8.5 billion. It rose 1.2% to close at $55.26 per share on December 16, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.0%, -1.3%, and 0.68%, respectively, on the same day.

FBHS is trading 1.2% below its 20-day moving average, 0.25% above its 50-day moving average, and 3.6% below its 200-day moving average.

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Related ETF and peers

The iShares Russell 3000 ETF (IWV) invests 0.04% of its holdings in FBHS. The YTD price movement of IWV was 13.5% on December 16.

The market caps of FBHS’s competitors are as follows:

  • Stanley Black & Decker (SWK) — $17.7 billion
  • Masco Corporation (MAS) — $10.5 billion
  • Spectrum Brands Holdings (SPB) — $7.2 billion

FBHS’s rating

On December 16, 2016, Macquarie initiated its coverage of Fortune Brands Home & Security with an “outperform” rating and set the stock’s price target at $65.00 per share.

On December 12, 2016, Goldman Sachs has downgraded the company’s rating to “neutral” from “buy.” It set the stock’s price target at $59.00 per share.

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Fortune Brands’s performance in 3Q16

Fortune Brands Home & Security reported 3Q16 net sales of $1.3 billion, which is a YoY (year-over-year) rise of 3.2% over its net sales of $1.2 billion in 3Q15. Sales for the Plumbing, Doors, and Security segments rose 7.3%, 4.4%, and 6.3%, respectively, in 3Q16 YoY. The company’s operating margin rose 140 basis points in 3Q16 YoY.

FBHS’s net income and EPS (earnings per share) rose to $123.4 million and $0.77, respectively, in 3Q16, compared to $107.5 million and $0.61, respectively, in 3Q15. It reported adjusted EPS of $0.80 in 3Q16, which represents a YoY rise of 25.0%.

Its cash and cash equivalents and inventories rose 16.8% and 1.2%, respectively, in 3Q16 YoY.

Quarterly dividend

Fortune Brands Home & Security declared a quarterly cash dividend of $0.18 per share on its common stock. The dividend will be paid on March 15, 2017, to shareholders of record at the close of business on February 24, 2017.

Projections

Fortune Brands Home & Security (FBHS) made the following projections for fiscal 2016:

  • sales growth of 9.0%–10.0%
  • EPS before charges and gains of $2.72–$2.76
  • free cash flow of ~$400 million

For an ongoing analysis of this sector, please visit Market Realist’s Consumer Discretionary page.

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